Simply put, a blockchain consists of a distributed ledger on a peer-to-peer (P2P) network. The ledger is made up of transactions which take place on the same network; transactions do not necessarily have a monetary value, and the word transactions is to be interpreted widely to mean any type of data transfer across such network.
The data transactions are collected in blocks, and each block of transactions is confirmed by the majority of the network one after the other. Block confirmation times vary widely, with some networks such as Bitcoin taking up to ten minutes on average to confirm a block, and others taking mere seconds.
Each block is built onto the previous one, with all blocks being linked together onto one single chain. And there you have it – that is the origin of the term blockchain!
Thanks to the blockchain, middlemen/intermediaries are done away with as all users on the blockchain network can transact directly with each other without any necessary intervention by third parties, save that of the nodes on the network which are responsible for transmitting transactions.
SOME FACTS ABOUT THE BLOCKCHAIN
- It has first been successfully used in Bitcoin, a cryptocurrency created by Satoshi Nakamoto in 2008
- While a blockchain consists of one main chain of blocks, side-chains can be developed on certain platforms, allowing infinite scalability
- Financial institutions were sceptical of the blockchain back in 2012-2013; now, they are developing various proof-of-concepts on blockchains
- Doing away with intermediaries opens up countless opportunities for technologies previously unattainable, while drastically reducing costs and time-consumption