In an attempt to understand the technical side of the cryptocurrency craze, I read the book, Bitcoin and Cryptocurrency Technologies (http://bitcoinbook.cs.princeton.educeton.edu). It was a great book and I’d highly recommend it. What follows is somewhat of a book report on the beginning chapters, a look under the hood at what a blockchain is.
The term blockchain has been floating around both the tech and finance communities a lot in recent years. But what is blockchain?
Blockchain is a digital ledger of all transactions across a peer to peer network. Each user in the network will have a full copy of the whole blockchain, which includes data of all transactions. Let’s say a user wants to pay another user. He would encrypt the transaction and broadcast it to the network. The transaction gets put into a new block. The ledger is maintained by miners, who work to approve the transaction and validate it using cryptographic techniques. Then the block is added to the blockchain.