What is Blockchain?

What is blockchain?

Blockchain is the original data structure behind the well-known Bitcoin network. You can best compare the system to a digital ledger. Ledgers are at the heart of many infrastructures that people rely on every day. In simple terms, a ledger is a list that records data mutations among each other. A vast number of services and software that we use today rely on databases that function as ledgers.

A good example of this is money. Nowadays, money can mainly be found in databases because few people carry cash around anymore. So money is primarily found in ledgers at financial institutions where all balances and transactions are kept.

How does blockchain work explained with a metafor?

Blockchain is a system for managing data. To make it easier to imagine, we will compare the system with an Excel spreadsheet.

The universal ledger is really nothing more than an extensive Excel worksheet shared with everyone in the world. This worksheet of data is accessible to anyone who participates or is interested in the network. Furthermore, anyone who has insight into this worksheet can also make changes to it. These changes are then made in near real-time to all other copies of the sheets, ensuring that everyone participating in the network is looking at the exact same worksheet at all times.

However, one significant feature that makes it unique is that only new lines are added to a blockchain. These lines are added in our example, at the bottom of the worksheet. So when a change is made to it, the change appears as a new line at the bottom of the database. This because an existing line can never be changed.