Blockchain is a technology allowing a network of users to jointly manage a database of transactions. What is special is that it is difficult to cheat, for example by spending the same coin twice. We will explain exactly what blockchain is and how it works.
Databases are often copied over a network of computers. If one of the computers fails, the information can be restored. This technology is also used in blockchain. Should one of the computers in the network suffer a power cut or should part of the database have been deleted, there are still hundreds of other computers that hold copies of the information.
In blockchain, the database is a chain of blocks. The blocks consist of approved transactions. When there any new transactions, new blocks will be added to the chain. The special thing about blockchain is that the blocks must be approved by a majority of the participants. And participants will be rewarded for this. That’s why the chain never ends. If a transaction had advanced far enough in the chain, there is very little chance that it will be reversed. That is why blockchain is so secure and powerful.
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A blockchain does not require a third party such as a civil-law notary or a bank to take part in a transaction. In practice, however, it is difficult to become a participant in a blockchain as an individual. For that, you often have to rely on a third party such as a crypto exchange service. This is because they do have certain resources at their disposal. Because a blockchain needs three things: a server with lots of storage space, a stable internet connection and a lot of power to keep the systems up and running.
Blockchain sounds safe, but is not without risks. With special equipment, within a blockchain network, dominant positions can be acquired that are not feasible for the ordinary user. For example, there have been attacks on blockchain networks in which tens of millions of euros in cryptocurrencies have been lost.
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