What is Blockchain?
In simple language, Blockchain is a chain of blocks.
Lets take a basic example,
Suppose that Olivia wants to send money to Jack with a wire transfer.
All of her money is stored inside a bank account, which has two primary purposes:
It keeps track of how much money she has. It provides an online portal that allows her to perform the wire transfer to Jack. Whenever Olivia authorizes the wire transfer, her bank processes the transaction and transfers money from her account to Jack's.
Behind the scenes, the bank has two primary technical features that make this possible.
A database - the bank maintains a database ledger of all Olivia's transactions to determine her account balance and transaction history.
A network - the bank uses a network to process wire transfers so that funds can be sent from her account to Jack's. It also gives her an online portal that she can connect to in order to do this.
Blockchain presents an alternative to this model by eliminating the need for a bank altogether.
Instead of sending money to Jack via wire transfer, she can send him cryptocurrency directly with a blockchain.
A blockchain is a peer-to-peer network, meaning it is a system of nodes, or computers, that all talk to one another. It is like a world-wide computer that fully replaces the bank.
It is responsible for processing transactions so that Olivia can send money to Jack. She simply needs to connect to a node on the network to initiate her transaction, and the blockchain handles the rest behind the scenes.
Each node on the network maintains a copy of the data on the blockchain. For example, they all know how much money Olivia has in her account.
Instead of a bank storing all this data inside a central database, the blockchain stores it redundantly on each node in the network. This makes it virtually impossible to tamper with the data. For example, Olivia cannot manipulate her account balance, because all the other nodes know how much money she really has.
So, from above example we can define Blockchain as - a constantly growing ledger which keeps a permanent record of all the transactions that have taken place in a secure, chronological and immutable way.
secure: blockchain placed information in secure way
chronological: every transaction happens after the previous one
immutable: once all transactions are build onto blockchain, then ledger can never be removed.
Blockchain Vs Cryptocurrency
It is important to note that blockchain and cryptocurrency are not the same thing. Bitcoin is a cryptocurrency, but blockchain is the underlying technology behind Bitcoin.