What is a blockchain?

A blockchain is a database.

Traditional databases are located within and managed by a single operator which could be a computer, a server, a company or an institution.

A blockchain database differs in that it is distributed across a peer-to-peer network.

Data is stored across the network, and each computer on the network (a node) stores the same information. The distributed or decentralised nature of the blockchain means that there is no single point of failure in the network. This makes it less open to attack or corruption.

Participants on the blockchain validate transactions which are then recorded on the database.

There are different ways that participants reach consensus on which transactions are valid.

Blockchain groups information into small data sets, called blocks. Blocks have limited storage: when one is complete, a new block is created and linked to the existing chain. The sequence of blocks in the chain is always visible to the whole network.

This makes it very hard for a single node to change a single bit of information, as that would entail changing the whole sequence - which would be obvious to everyone. On top of that, data on a blockchain is secured by a number of cryptographic features that make it even harder to change even the tiniest transaction recorded.

This combination of transparency and cryptographic linking is why we say that the information on a blockchain is reliable, secure, immutable, and cannot be forged.

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At Owl Explains, we collaborate with trade associations, think tanks, policymakers, and industry partners to further understanding of blockchain, crypto, and Web3.

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