What is the Blockchain?
Blockchain software technology facilitates secure peer to peer transactions without an intermediary. Invented in 2009, the idea behind blockchain is decentralisation. It is not administered by one person or company, transactions cannot be reversed, accounts cannot be deleted and new currency cannot be created out of nowhere. The system is maintained by a distributed file sharing network. BitTorrent and Napster were among the first to exploit the file sync and sharing platforms. Bitcoin, Ethereum and Synereo are examples of applications that run on the blockchain technology.
Global trade as we know it has become complex. We use trusted third parties such as governments, banks, accountants, notaries and paper money to approve and facilitate transactions. Bookkeepers keep track of transactions which are often closed to the public.
Built on sound mathematical principles the blockchain is programmed to maintain a collective bookkeeping which is distributed across the entire network. All transactions are logged and made available to everyone. In the case of Bitcoin, transactions are verified by bitcoin miners who maintain the ledger, ensuring multiple confirmations and that all the different nodes continuously agree on the ledger balance according to every transaction that has taken place. If anyone attempts to corrupt the transaction or enter false information the nodes will not arrive at a consensus and refuse to incorporate the transaction into the blockchain. Everyone has access to a shared single source of truth. The blockchain is the foundation to create a digital currency and a secure payment system. Taking the blockchain to the next level, “Ethereum is a public blockchain-based distributed computing platform, featuring smart contract functionality. It provides a decentralized virtual machine, the Ethereum Virtual Machine (EVM), that can execute peer-to-peer contracts using a cryptocurrency called ether.” (Wiki/Ethereum)
Why is it called Blockchain?
Blocks are made to contain lists of transactions. Algorithms are used to mathematically prove the person releasing the coins has the right to do so. The transaction is published to the network and then for the transaction to be valid it must be cryptographically signed before being assigned to a block. Blocks are continuously being filled up and new ones are being created, resulting in a long chain of sequenced blocks describing the entire history of transactions.