○ BLOCKCHAIN: the backbone of cryptocurrencies.
If yesterday we learned what cryptocurrencies are, today we will dive into the technology that underpins them: blockchain. Imagine blockchain as a huge digital ledger, but with a peculiarity: it is distributed across thousands of computers around the world and is practically impossible to alter.
How does it work?
* Blocks: Information in blockchain is stored in blocks. Each block contains a set of transactions.
* Chain: Blocks are linked together chronologically, creating a chain of blocks or blockchain.
* Decentralization: The blockchain is not controlled by a single entity, but is shared by a network of computers. This makes it very secure and transparent.
* Immutability: Once a block is added to the chain, it is extremely difficult to modify it. This is because each block contains a hash of the previous block, creating a sort of timestamp.
Why is it important?
* Security: Decentralization and immutability make blockchain a very secure technology for storing information.
* Transparency: All transactions are recorded publicly, which increases transparency.
* Efficiency: By eliminating intermediaries, blockchain can make transactions faster and cheaper.
Simple analogy:
Imagine blockchain as a ledger that all partners in a company can view and edit. Every time a transaction is made (e.g. a sale), a new page is added to the ledger. This page contains information about the transaction and a stamp that links it to the previous page. If someone tried to change an earlier page, all subsequent stamps would become invalid and the fraud would be detected.
In summary:
Blockchain is a revolutionary technology that is changing the way we think about security, transparency, and trust in digital transactions. It is the foundation upon which cryptocurrencies and many other innovative applications are built.
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