Introduction to blockchain technology
What is Blockchain?
Even though the concepts around blockchain technology can be wildly complex, blockchains themselves are quite straightforward. In regular human-speak, a blockchain is just a public database. Blockchains store a history of transactions between parties on a forum that can be accessible by anybody.
Let's discuss the main differences between a regular database and the blockchain!
First, a blockchain is append-only. Once data has been written, it can't be changed (known as immutability). That information is locked on the blockchain forever.
Second, a blockchain takes the form of a linked list instead of a table. That is, every set of transactions (known as a block) that is added to the blockchain must point to the previous block. That way, there's a linear history of every transaction that has ever occurred on the blockchain.
Finally, blockchains are decentralized - they're not owned by any particular organization, and can't be taken down in the same way as a regular database. That's because a single blockchain is copied among hundreds of different users who each run nodes, each containing an identical copy of the entire history of the blockchain. Since all of these nodes are communicating and agreeing on the state of the blockchain constantly, the only way to "hack" a blockchain is to perform a 51% attack: convincing the majority of nodes to agree on a new, different blockchain state.
What are cryptocurrencies?
Two primary forms of data are stored on the blockchain: cryptocurrencies and smart contracts.
Cryptocurrencies are digital currencies that can be exchanged online as a form of payment for goods and services. Typically, they're released as part of a new blockchain project and managed by a foundation that helps to govern the supply - for instance, the Ethereum Foundation provides governance for the ETH token.
They differ from traditional digital payment methods in a variety of ways:
- Permissionless: Instead of having to register on a financial platform, anyone in the world can access and transfer cryptocurrency directly. Users don't need to worry about their assets being frozen or controlled by a third party.
- Anonymity: Financial platforms are regulated by governments, and require personal data to use their services as a result. Cryptocurrencies allow transferring ownership without necessitating proof of identity.
- Volatility: As a result, market value can vary wildly (except for stable coins) based on expectations for the project or blockchain tech as a whole.
Source: Quora Answer