Blockchain is a distributed, digital ledger that records transactions on a permanent, public, tamper-proof ledger. Transactions are grouped into blocks and then chained together using cryptography. Each block references and identifies the previous block, creating a chain of blocks in chronological order, hence the name “blockchain”. By creating an immutable and public ledger, blockchain technology is revolutionizing how data and digital assets are transferred, stored, and secured.
The first step in a blockchain transaction is the initiation of a transaction request, which is broadcast to a network of nodes. A node is a computer connected to the network. When the transaction request is received, each node validates the data contained within using a consensus protocol. If all the information is accurate, the nodes will add the transaction to their respective copies of the ledger.
Once all the nodes have added the transaction to the ledger, the transaction is confirmed and the funds are transferred. Any subsequent changes to the data contained in the block would require the consent of the network, which is highly unlikely as each node in the network has an exact copy of the ledger. The result is a secure, immutable record of each transaction.