What is a blockchain?

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2:19 minutes
Watch Video
2:19 minutes

What is a blockchain? As the name suggests, a blockchain is a chain of blocks. The part that may not be so obvious is that blockchains are used to store information about transactions and keep a perfect record of the past. Blockchains are also known as Distributed Ledger Technology (DLT) because blockchain ledgers are distributed amongst all computers that elect to run their software. Where is a blockchain located? Every single computer that runs the code for a given blockchain possesses data containing all transactions that have ever taken place on that blockchain. Since the record of all transactions is available for anyone that wishes to see it, there is no need for a centralized authority - like a bank. Essentially, a blockchain is located on every computer that downloads its software. What was the first platform that used a blockchain? Bitcoin, the first working platform built using blockchain technology, was invented in order to reduce our dependence on banks. Its launch in 2009 immediately following the 2007/2008 financial collapse caused by banks was no coincidence. Satoshi Nakamoto, the creator of Bitcoin, saw it as an opportunity to take economic control from centralized authorities and give it back to the people. What are “blocks” on a blockchain? Blocks are groups of transaction data that are encoded into a blockchain. New blocks on a blockchain are written - or mined - when new transactions take place. Typically, voluntary miners work on blockchains to verify new transactions, ensuring that all of the value is in the right place. Miners ensure the legitimacy of distributed ledgers. Once blocks of transactions are written onto a blockchain, it is virtually impossible for the records to be changed or erased. We should also note that as blockchain technology is being used and adapted by more projects over time, the definition of "blockchain" is changing and not all blockchains work exactly the same. However, the information we provide in this course will give you an excellent background for understanding this technology. As you start to learn about the cryptocurrencies being developed, you'll see for yourself the nuances that make each coin different.

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