‘Essentially, blockchain is a digital distributed ledger which efficiently traces the movement of funds or other assets from issuance to current owner’.
A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. It is a digital distributed ledger, tracing the movement of funds or other assets from issuance to current owner.
The transactions are chained together from sender to receiver in a sequential and time-ordered manner. Blockchain is essentially a way of sending and recording financial transactions.
In the past, transactions were recorded in a simple accounting book, and more recently as entries on a spreadsheet or database held on large IT systems contained within a given institution.
Unfortunately, such systems are vulnerable in a number of ways. There is a single point of failure and transactions may not always be secure and completely up-to date, they could even be tampered with or deleted. For these reasons, digital distributed ledgers were invented.
Digital distributed ledgers are not stored on any single server or database but on a number of computers across multiple networks and even geographic locations by the validators of the blockchain. Each validator has an identical copy of the blockchain’s entire transaction history and any changes are reflected almost instantaneously in all copies.
Advantages of Blockchain
The duplication of digital distributed ledgers keep them safe from accidental or deliberate destruction and the use of cryptographic proofs lock, in perpetuity, the transaction order. As there can be no debate about the sequence of events, the ledger cannot be manipulated to show different versions of the truth. Blockchain creates immutable records which makes it the perfect medium to record ownership of assets such as gold.
Public verification of the blockchain is enabled through a graphical interface. Validators can be relied upon to perform checks which they do automatically every time they undertake an action. This high degree of visibility ensures there is consensus over transactions within the ledger, eliminating the need for a sole central authority to manage it.