What is Blockchain Technology?
Blockchain technology is a decentralized digital ledger system that securely records transactions across multiple computers. This means that once a transaction is documented, it cannot be altered retroactively without the consensus of the network participants. The primary features of blockchain technology include transparency, security, and immutability.
Each block in the chain contains a list of transactions and a unique hash of the previous block, creating a chain of data. This structure ensures that all transactions are traceable and that any tampering becomes immediately evident. In the context of cryptocurrencies, blockchain serves as the foundational technology that enables the existence of digital currencies like Bitcoin and Ethereum.
Additionally, blockchain technology enables smart contracts, which are self-executing contracts with the terms directly written into code. This capability enhances automation and trust in transactions, reducing the need for intermediaries. Due to its robustness and versatility, blockchain is finding applications beyond cryptocurrencies, including supply chain management, healthcare, and financial services.
Understanding blockchain technology is crucial for anyone interested in cryptocurrency investing, as its principles underpin the value and operation of digital currencies.