A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as “completed” blocks are added to it with a new set of recordings.
Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
Bitcoin nodes use the blockchain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
Blocks are added to the blockchain in chronological order, and every node has a copy of the blockchain.
In order to alter any Unit of information on the blockchain, you would need more than half of the network’s computational power working together in unison.
This makes tampering with historical data practically impossible. For these reasons, blockchains are often described as being “immutable.”
How Does a Blockchain Work?
As mentioned earlier, a blockchain is a digital ledger of all cryptocurrency transactions.
However, the term “ledger” can be a bit misleading, as it implies that there is only one central copy of this digital record.
In reality, there is no central ledger; instead, the ledger is distributed across a network of computers, known as “nodes.”
Each node has a copy of the ledger, and each time a new transaction is made, it is recorded in all ledgers across the network.
This network of computers is what allows the blockchain to be so secure when you trade the currencies at platforms like Virtual Payout.
In order to change any information on the blockchain, one would need to hack into the majority of computers on the network – an almost impossible feat.
In addition to being secure, the blockchain is also transparent.
According to Virtual Payout, all transactions are recorded in the blockchain, and anyone can view these transactions at any time.
This allows for a high level of accountability, as all users can see what has been happening on the blockchain.
The combination of security and transparency makes the blockchain a highly appealing solution for a variety of different industries.