At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words âblockâ and âchainâ in this context, we are actually talking about digital information (the âblockâ) stored in a public database (the âchainâ).
âBlocksâ on the blockchain are made up of digital pieces of information. Specifically, they have three parts:
- Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon. (NOTE: This Amazon example is for illustrative purchases; Amazon retail does not work on a blockchain principle as of this writing)
- Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon .com, Inc. (AMZN). Instead of using your actual name, your purchase is recorded without any identifying information using a unique âdigital signature,â sort of like a username.
- Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a âhashâ that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms. Letâs say you made your splurge purchase on Amazon, but while itâs in transit, you decide you just canât resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can... (More)