What is blockchain?
📖 Definition
Blockchain can be defined as a decentralized, distributed and immutable ledger storing data - you can think about it as a big digital database. It maintains a list of ordered records called blocks. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data. This digital ledger is distributed and duplicated across the entire network of computer systems (nodes) on the blockchain.
Each block in the chain contains a number of transactions and when a new transaction is to be added, the nodes communicate (sticking to a protocol) and validate new blocks. A record of that transaction is then added to every participant's ledger.
⚙️ Proof of Work
In order to confirm transactions we need some sort of consensus mechanism. The first to market was called Proof of Work (PoW). It is executed by miners who are key participants of the blockchain. Miners must show proof of work (and show it fastest) to win the right to mine a block (in simple words - add block to the chain). The work means solving complex math problems and the proof is the solution to the problem. Virtual miners around the world participate in this contest to solve a math puzzle first, update the blockchain with the latest verified transactions and get rewarded with a specific amount of cryptocurrency.
🪨 Immutability
An immutable cryptographic signature called a hash is added to each block, so if one block in one chain was changed all the nodes would immediately known about it. In order to manipulate blockchain data in a malicious way, a hacker would need to change every block in the chain across all duplicated versions of the chain.
💱Cryptocurrency
Blockchain enables the existence of cryptocurrency. A cryptocurrency is a digital form of exchange which uses encryption techniques for its creation and verification of the transfer of funds. Cryptocurrencies are denominated into crypto tokens which represent fungible and tradable assets which are part of the blockchain. By storing their crypto in a wallet the holder has control over their private keys and consequently their cryptocurrency. Not your keys, not your coins. There are many types of crypto wallets available with each offering unique features tailored to the market. Many people believe crypto wallets will become ubiquitous in the future allowing everyone access to a wide range of cryptocurrency products and services.
👜 Wallet
A blockchain wallet is a digital wallet that allows users to store, manage, and trade their cryptocurrencies.