What is a Blockchain?
A blockchain is a decentralized digital ledger that records transactions across many computers in a way that ensures the registered transactions cannot be altered retroactively. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant's ledger. This technology underlies cryptocurrencies like Bitcoin and Altcoins, providing transparency and security.
Blockchains are immune to data alteration, providing a significant advantage over traditional centralized databases. This is accomplished through cryptographic hashing and consensus mechanisms, which ensure that all participants agree on the validity of transactions. In the context of Bitcoin, the blockchain serves as a public ledger, tracking the balance of each Bitcoin wallet and helping to prevent double-spending.
Altcoins, or alternative cryptocurrencies, also use blockchain technology, but they may experiment with variations to enhance scalability, speed, or anonymity. Some popular examples include Ethereum, which introduced smart contracts, and Litecoin, which focuses on faster transaction times. Understanding how blockchains function is crucial for grasping the broader implications of cryptocurrency in finance.