Bitcoin blockchain: what is it?

Bitcoin blockchain

 Bitcoin uses a public and distributed "accounting system" or a "general ledger" known as a blockchain. Blockchain technology is possibly the greatest innovation that Bitcoin offers. Countless companies and service providers, especially from the financial sector, are showing interest in the technology and are even considering using it for themselves.


    What is a blockchain?

    A blockchain is a decentralized, unchangeable, and continuously growing database.

    One of the main strengths of blockchain technology is the ability to securely disseminate information. The information is distributed over several nodes or computers, which is why blockchain technology is often called "distributed ledger technology".

    Unlike central providers, the database is not stored and controlled in one place, but by several thousand computers at the same time. If you want to change the database, you would have to change every single copy on every computer.

    In addition, the Bitcoin network checks the correctness of all data at certain intervals.


    Blockchain and blocks

    The records that are added to a blockchain are called "blocks". Since these blocks are cryptographically chained together, it becomes difficult to manipulate these records and is almost impossible. It would take tremendous computing power to manipulate the blocks.

    With Bitcoin, a block is created every ten minutes and this is chained to the previous block. The processing of these data sets is called mining. And this stringing together creates a chain of blocks, i.e. a blockchain.


    What data does a block contain?

    The Bitcoin blockchain mostly contains transaction data from different transfers, a timestamp, and a hash of the previous block.


    What problem does Bitcoin and blockchain technology solve?

    In the real world, proving whether a thing is yours or not is easy. It becomes more difficult when the thing is digital. An example:

    I own a digital dog and I would like to give it to you as a present. So I am shipping the digital dog to you. But how can you be sure that the digital dog is only yours? And can you be sure that I have not previously sent the digital dog to Anna as an email attachment? Maybe I copied the digital dog several times or put it online. With digital things, it becomes more difficult to prove that something is mine or yours.

    That's why you need an accounting system. So I buy a book that is now the ledger for digital transactions and write in this ledger that I will give you a digital dog on 02/08/18. But now someone would have to manage this ledger. If you left this book to me, I could change the book at any time. If I gave you the book, you could change it. We'd have to trust each other that both sides would be honest forever. Also, someone could steal our ledger and register as the owner of the digital dog.

    That is why we need a general ledger that does not require trust, is decentralized, secure, and protected against forgery and manipulation. And that's exactly what Bitcoin has achieved, with the blockchain as a decentralized ledger recording all digital transactions in a forgery-proof manner.


    Great interest in the blockchain

    The decentralized digital ledger is at the heart of Bitcoin, and many companies are showing significant interest in blockchain technology. This technology could improve all finance. On the one hand, administrative costs for one's own account could be minimized and, on the other hand, the blockchain automatically records all transaction data, which could significantly simplify accounting.

    But not only the exchange of a bitcoin can be logged. Digital goods can also be logged. Smart contracts can be implemented with blockchain technology, as is already the case with Ethereum today.


    Blockchain.info is not the Bitcoin blockchain

    The Blockchain.info website offers various data relating to the Bitcoin blockchain. The Bitcoin blocks currently found are displayed on the homepage of the website, as well as the latest transactions that are made in the Bitcoin network. In addition, the search function can be used to search for the Bitcoin block height, a Bitcoin address, block hash, transaction hash, hash260, or the IPv4 address.


    Bitcoin Block Explorer

    However, this website is not the official Bitcoin blockchain, it only depicts the official Bitcoin blockchain. This is why websites that map data on the Bitcoin blockchain are called Bitcoin Block Explorer. These help with research and provide various statistics: number of bitcoins in circulation, number of transactions, difficulty, and much more.


    Blockchain wallet

    The Blockchain.info website also offers a blockchain wallet. This is by no means an official Bitcoin wallet, it is just an online wallet provided by the company Blockchain.info.

    However, there is a high-security risk with web wallets. Be sure to choose a better Bitcoin wallet for storing larger amounts of money.


    The disadvantage of a blockchain

    In contrast to central databases, blockchain technology requires constant computing power or some kind of work from different (decentralized) sources in order to ensure security and timeliness.