Blockchain technology is a secure software structure that allows data to safely and securely be stored in a decentralized way. Find out more

The rise of cryptocurrency is one of the most interesting topics in finance. Blockchain technology is the basis of cryptocurrencies. What is the blockchain? And what are its unique characteristics?

It is important to understand blockchain in a few steps. Understanding the concept of blockchain is essential before we can fully appreciate its benefits.

What is a decentralized ledger?

Most financial networks are centralized. A centralized ledger is used to manage and settle payment requests from banks. A ledger is either a computerized or written record of all transactions that a business has completed. A central ledger is therefore a record of all transactions made by a group of companies. This would be all banks, NBFCs and other financial institutions.

After a transaction is recorded on the central ledger, companies involved adjust their internal ledgers levels to reflect the change. It is essential that the centralized ledger be kept up-to-date in a safe and timely fashion to preserve the integrity of the system.

A newer type of ledger-keeping is now available. This involves more people participating in the actual maintenance and updates of the ledger. Decentralized ledgers are those where tasks are given to a few entities within a network, while distributed ledgers are when all of these tasks are given to the entire network. Depending on how they are set up, blockchains can either be distributed or decentralized.

What is Blockchain and how does Blockchain work?

Blockchain technology, in simple terms, is a secure software architecture that allows data storage in a safe and decentralized way.

This system is particularly useful because each transaction, called a block, is updated in real-time and added to the chain’ of transactions simultaneously on every node. This is why the blockchain name was chosen. Even more important is the immutability of the chain. It cannot be altered, deleted, or modified in any other way. Once a transaction has been recorded on the blockchain it is available for everyone to view forever.

By Alex Alena

Alex Alena has been the lead news writer at Cryptocurrency Updates. With a degree in communications, Matt has an uncanny ability to make the most complex subject matter easy to understand.