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What Is Blockchain

Blockchain originated from bitcoin created by Satoshi Nakamoto. As the underlying technology of bitcoin, it is essentially a decentralized database. It refers to a technical solution of maintaining a reliable database collectively through a decentralized and de-trusted approach.

Blockchain technology is a technical scheme which does not rely on any third party but proceeds through its own decentralized nodes to store, verify, transfer and exchange network data. Therefore, some people, from the financial accounting perspective, view the blockchain technology as a scattered, open and decentralized large-scale network book. Anyone can use the same technical standards to add their own information at any time to extend the blockchain for it to continuously meet the demand of data entry brought about by various needs.

Generally speaking, blockchain technology refers to a way for all people to participate in bookkeeping. There's a database behind all systems, and you can consider the database as a big ledger. Then it becomes very important that who will be doing the bookkeeping. Currently, the bookkeeping of a system is performed by the system owner, i.e. the bookkeeping of WeChat is done by Tencent, while that of Taobao is by Alibaba. But now in the blockchain system, everyone in the system can have the opportunity to participate in bookkeeping. If there is any data change within a certain period of time, everyone in the system can keep a record of it. The system will judge who is the fastest and best in bookkeeping during this time, write the contents of his records into the ledger and distribute the book content of this period to all the other people in the system to back up. Thus, everyone in the system has a complete ledger. And we call this way as the blockchain technology.

Blockchain technology is considered to be the most disruptive technical innovation since the invention of Internet. It relies on cryptography and the clever decentralized algorithms of maths. Without involving any third party center, it makes participants reach a consensus on the Internet where it is impossible to build a trust relationship. It solves the problems of reliable transmission of trust and value at a very low cost.

The peer-to-peer network of Bitcoin stores all the transaction history in the blockchain. The blockchain is continuously extended. And new blocks will not be removed once they are added to the blockchain. The blockchain is actually a group of decentralized client nodes and a decentralized database composed by all the participants. It is a record of the history of all bitcoin transactions. Once the transaction data of the bitcoin is packaged into a "data block" or "block", the transaction can be considered as initially confirmed. When the block is linked to its previous block, the transaction will be confirmed further. After the confirmation of 6 consecutive blocks, the transaction is basically confirmed irrevocably.

Blockchain is public on the Internet and can be queried in the data of every offline bitcoin wallet. The lightweight bitcoin wallet uses online confirmation, i.e. it will not download blockchain data to your device storage.

 

The digital currency can easily be regarded as a new currency by traditional financial institutions, but the meaning and value of its underlying technology is far greater than its monetary attribute. In the case of bitcoin, it is regarded as a peer-to-peer digital currency in general, but technically it is a peer-to-peer, decentralized network platform which relies on the blockchain technology. Digital currency is a global peer-to-peer network platform built on the technology of blockchain. The application of blockchain in the field of digital money, represented by Bitcoin, is also known as Blockchain 1.0.

Notice: Cryptocurrency is an innovative investment product with high price fluctuations and high investment risk. Please fully understand cryptocurrency before investing.