Imagine a chain of digital blocks that contain information. Each block can contain a certain amount of data—for example, transaction information.
Each transaction is added to a "block" of data, which is then added to a "chain" of blocks. The entire chain represents a digital ledger that keeps track of data, for example - transactions. This process creates a permanent and unchangeable record of all data.
In simple terms, blockchain is a digital technology that allows multiple parties to store and share information securely and transparently.
For cryptocurrencies, the most common use for blockchain is that it takes the form of a digital ledger that records transactions in a secure and decentralized way. You can think of it as a digital 'notebook' where every page is connected to the prior one, making it impossible to tamper with any previous pages.
One of the key features of blockchain technology is that it is decentralized. This means that there is no single point of control or ownership. Instead, the information is stored and maintained by a network of computers across the internet, called "nodes," that work together to validate and process transactions.
Decentralization ensures that the information is not stored in one central location and no central authority controls all data. It makes it much harder for hackers to access and manipulate the system because they would have to hack into multiple computers simultaneously.
Additionally, each block in the chain contains a unique code called a "hash," which links it to the previous block. If someone tries to tamper with one block, it would be obvious, as it would not match the code of the previous block.
In terms of transparency, it is open for everyone to see because the information is stored on multiple computers. This allows for transparency in transactions and ensures no room for fraud or manipulation by one person or group.
In simple terms, the decentralized system and unique coding of each block in the chain make blockchain technology extraordinarily secure and transparent.
