What Is A Blockchain?

 

We have also described the term blockchain again in our crypto glossary, but here it is elementary, hence the explanation here: The blockchain is also referred to as "distributed ledger", as "distributed ledger". Without this distributed ledger, cryptocurrencies would not be possible. Since it is ultimately just code, digital money is theoretically very easy to manipulate.

A hacker only needs to change a few numbers and suddenly he would be rich. However, the blockchain records the balance and transactions of the users in a forgery-proof and transparent manner. The blockchain is also decentralized. It is distributed across various computers and servers, which constantly exchange information with each other and agree on the current blockchain version. This ensures that there is only one current version.

Each cryptocurrency has its own blockchain. This blockchain consists of a series of blocks. Each individual block stores and cryptographically encrypts the entire transaction history up until the point at which the block is created. When mining, new transactions are combined into a block and added to the blockchain. This block thus contains the entire previous transaction history as well as the new transactions. Such a system is extremely difficult to manipulate. A hacker would have to rewrite every single block if they wanted to steal Bitcoin.

Over time, it turned out that you can do more with the blockchain than sending digital means of payment. Ethereum gave the go-ahead: Ethereum is not just a cryptocurrency, but an entire platform for decentralized programs and smart contracts (digital contracts). Blockchain technology offers new opportunities for administration, finance, video games, logistics, property rights and much more. The cryptocurrency itself can play a rather subordinate role.