The Indian govt may not be warm private cryptocurrencies, but various states are already using the blockchain technology, which is also the base for cryptos, in many ways. But what is blockchain?
Blockchain is essentially a database, but very different from every other database you may have seen. As the name suggests, a blockchain is a chain of blocks, with each block storing some information.
Other key features of blockchain are that it is decentralised and by the very nature of that design, it is immutable.
Let’s see how that works by taking the example of the blockchain that powers Bitcoin, the world’s leading cryptocurrency by market cap.
When a new Bitcoin transaction takes place, it is transmitted to a network of peer-to-peer computers scattered around the world.
These computers compete among themselves to solve complex mathematical equations that would confirm the validity of that transaction.
Once the transaction is confirmed to be legitimate, it is added to a ‘block’ on the ‘blockchain’.
These blocks are then chained together, creating a long history of all transactions that are permanent.
An important feature of blockchain here is its decentralised or shared nature.
Unlike other databases which are controlled by a central authority or computer, a blockchain, in most cases, is accessible to a network of computers, which are called nodes.
All of these computers can at any time view the blockchain and track each and every transaction that is being added to it.
This is also why the data on a blockchain is immutable.
Since the blockchain is present on each and every node, if one node has an error in its data or if someone tries to tamper with the blockchain by compromising one of the nodes, all the other nodes would serve as reference points and prevent tampering.
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