How does Blockchain Work?
What is a block?
A block is the name for a small amount of data. Think of it as a page of transactions of, for example, when, who to/from, how much etc. You add this block to the chain in sequence. There can be no changes to previous blocks or to the order of existing blocks. You can only append. Incorrect transactions would need to be corrected by building a new block with the corrections.
How is it kept secure?
Every block uses cryptographic hash or hashing. A hash is where you chop up the date into pieces, perform calculations on each and then reassemble the information together – which then appears a random and meaningless string of text (e.g. this article could be hashed to say AD080844D). This is not the same as encryption. When it is located in multiple locations, you can take the data, hash it again and compare the hash value of new and old. If they are the same, nothing has been tampered with.
Types of blockchain?
Blockchains can be public or private. For businesses, the question moves to ‘permissioned’ or ‘permission-less’. The latter is commonly used for currency and open platforms, which means anyone can participate. Permissioned blockchain is by invite only, and you can restrict levels of access and use (e.g. read-only).
