Before we go on to talk more about blockchain let’s first get an understanding of what a block is.
A block is just data or collection of records. For bitcoin, it is just a collection of transactions on the network.
So, why do we need the blockchain to store data?
Because blockchain can help us trust the data.
Let me explain.
Suppose you want to buy a house. The old way of getting all the information is to look at its ledger from a title company.
This ledger will have all the records related to that house. Like who was the owner, what modifications the house had, who all bought it, etc.
But there is a problem. Can you trust this ledger…?
You can’t because this data is tamper-able. Anyone can manipulate the system to remove, change or add new information about the house to this ledger.
That is where blockchain can help us. Because it validates the data for us.
How does blockchain do that?
The answer to that lies in how a blockchain tracks and stores data.
Each blockchain network has a limit of records that each of its blocks can record. Once that is filled another block stores it and gets linked to the previous block in chronological order.
Thus forming a chain of blocks or BLOCKCHAIN.
Once the block is filled we add them to their respective networks by mining them.
yes, you may be familiar with Bitcoin or Ethereum mining. It’s just computers solving complex calculations to validate data stored in blocks.
And each miner will get a reward depending on the computation they did and the network they are mining on. For the Bitcoin network, the reward would be…
you guessed it, Bitcoins.
Now to understand these complex calculations we need to look at cryptography and hash keys, which is not the scope of this article.
Instead, we will have a simpler approach.
Each block in the blockchain has a key associated with it. When a new block is added this will generate a new key which will contain all the information about the previous block including its key.
And the computers connected to the network for mining will have to compute what this key is and find the data associated with it.
This makes the blockchain decentralized. This means the data will be verified and stored across many computers in the network.
Instead of one person or company having the access to it. Like the title company, we talked about earlier.
Since each block has the information of the key of the previous block. If any of the bock’s records have been tampered with then the blockchain can point to where the error happened and restore it with the correct data.
So hacking or tampering with the data is close to impossible. As it would require the cheaters to hack millions of computers in the network.
Thus creating trust in the data as it is strongly resistant to alterations.
We also wouldn’t need intermediaries or middlemen/women for data validation if we use blockchain.
Blockchain can be used not just for storing transaction records in the case of cryptocurrency networks. But also for recording any kinds of data, like…
your medical records, land records, school or education records, even to check the quality of the food we eat.
The possibilities are endless and we barely just scratched the surface.