What is the Blockchain?
The blockchain is a shared ledger of financial transactions that have occurred on the Bitcoin network.
The first blockchain was created within the original computer code for Bitcoin. When a transaction occurs on the Bitcoin network, it is grouped together with other transactions into a block.
This block is linked to the previous blocks on the Bitcoin blockchain through a process known as “mining”.
When a block of transactions is added it is linked to the previous block on the blockchain, that block is also linked to the block before it.
The blocks are linked together, using cryptography, so the transactions, data and order of blocks can’t be altered or deleted.
The blocks are linked together like a chain of blocks, hence the name blockchain. You may have noticed that when you transfer money between banks, the money is removed from your account but doesn’t appear in the other bank account until days later.
This is because each bank maintains separate ledgers and has to reconcile them individually. The Bitcoin blockchain is a shared ledger of transactions. When bitcoins are sent from one person to another, the transaction is reconciled on the same ledger that everyone has access to. This means that the transaction occurs almost instantly because the sending and receiving of the bitcoins is processed at the same time on the same ledger.
When a transaction is created it is sent to all computers connected to the Bitcoin network, computers validate these transactions, group them into blocks and add them to the Bitcoin blockchain.
When a block of transactions is added, it is updated on the public ledger which all computers on the network have access to and can validate. Everyone on the Bitcoin network can view transactions all the way back to the very first transaction.
There is a lot of transparency on the Bitcoin network which also prevents against fraud. As everyone on the network can see all the transactions and balances, it is easy to check if transactions are valid.
Once a transaction occurs on the BitBitcoin network, it is recorded and can’t be altered or deleted. This creates a permanent record of every transaction that has ever occurred, along with an audit trail of where the bitcoins came from.
A new block of transactions is added to the Bitcoin blockchain approximately every 10 minutes.
