What is the blockchain?

The blockchain is the entire history of transactions made with a certain cryptocurrency. Because the blockchain is the technology behind every single cryptocurrency, it’s critical for our understanding of cryptocurrencies. So let’s break that down.

A block

Whenever two users of a cryptocurrency, say bitcoin, send coins to each other, a transaction is created. This transaction contains, among other details, the wallet address of the sender, the wallet address of the recipient and the amount of currency sent.

These transactions are added to an unverified block, with each block containing the maximum of a pre-specified number of transactions, depending on the cryptocurrency in question. Once the transaction is added to a block, it is said to be immutable: it cannot be edited and cannot be removed.

You can think of a block as a page of a ledger containing a list of transactions. Once the block is filled, miners will verify the transactions (more on mining later) and the block is ready to be attached to the chain.

The chain

Each mined block is then attached to the rest of the blocks in the blockchain. This chain of blocks contains every single transaction executed in the history of the cryptocurrency. The block is given a new identifier and also the previous block’s identifier. This attaches the block to the previous one in the chain and so on. Any one block can only be attached to one previous block and can only have one child block at any one time.


2018 Trade Index, Inc.

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