What is Blockchain Technology?
Blockchain Technology came into picture first when Bitcoin was first released by Satoshi Nakamoto. Before him (or her), nobody could solve the common problem pertaining to all virtual currencies – the problem of double spending. Using blockchain, satoshi solved this problem by making a decentralized network of participants wherein the network itself ensured that funds are not spent more than once without the need for a central authority
In simple terms, as the name indicates, blockchain is a chain of blocks that contain information in such a manner that the data is almost immutable.
It is a distributed ledger which helps to record transactions and tracking assets. Being distributed, all the participants in the blockchain network have a copy of the blockchain and the ledger is open to anyone.
Though it may seem complex to understand the fundamental values of the blockchain, the following example will make everything clear.
A popular analogy used to explain the behavior of blockchain is that of Google Docs.
Before Google Docs, if people working on the same project wanted to share files together, they would send one version of the MS Word document and then wait for the other person to make the required changes and then return it back.
Until the person returns the updated copy back, you cannot make further changes which means that you are locked from accessing the document.
That is how databases also work today – two owners cannot update the same database at once. Rather, one has to wait for the other person to finish. Even banks transfer money in a similar fashion. They briefly lock access to particular accounts while they execute the transfer and when the transfer is executed, then they open the access again.
Imagine Google Docs now. All the parties involved in a particular project can have access to the same document at the same time and can effectively see all the changes that are being made by anyone on the team.
Each member can continuously verify the changes that are being made to the document.
This is what the blockchain essentially is. All the participants (nodes) in a network have a copy of the blockchain (or the ledger) so that when the changes are made, they can be instantly verified by achieving a consensus amongst the group members.