Blockchain is a distributed ledger technology (DLT) that can track and record anything of value from financial transactions to land titles. A distributed ledger means that a single piece of information is not stored in one single location (e.g. PC hard drive, server, etc) but rather, identical information is synchronized in several locations in order to maintain and verify the accuracy of information. This allows for a secure and decentralized way of storing and sharing information. Each block has limited information storage capacity and once a block is filled, it is chained (or linked) to the previous block through a cryptographic hash identifier; hence, the name blockchain.
Blockchains store blocks of information in a chronological sequence that are irreversible and immutable. For example, if there is a change in ownership of an NFT, the block with the previous ownership information does not rewrite, but rather the new information is stored in a new block showing that the NFT changed ownership from wallet A to wallet B at a particular date and time using a digital timestamp.
Blocks are added to the chain as new information is provided and verified by the nodes on the network. Before a new block is added, a few things need to happen:
Decentralization means no one person or entity (e.g. a company) has control over the network. The control and authority are spread out amongst thousands of individual computers (i.e. nodes), rather than centralized by a singular authority. Decentralization is important because it reduces the ability to tamper with stored information, which creates trust in the system.
Ultimately, one of the core benefits a blockchain accomplishes is that it removes all intermediaries from the process, thus creating a trustless peer-to-peer network. For example: A bank acts as the intermediary between you and another person/business to which you want to send money. The bank is paid a fee for processing the transaction and ultimately has full oversight and control of the transaction.
Blockchain technology has the power to transform how we do business within the finance and banking sector, global currency exchange, personal data storage (ie medical records) and even how we buy and sell real estate. Be ready, because blockchain technology could change almost every industry you can think of!
Thanks to Zoha Aamer & Elizay Jehangir for proofreading it!