Decentralization: Blockchain operates on a decentralized network of computers, often referred to as nodes. Each node on the network has a copy of the entire blockchain, and there is no central authority or single point of control.
Consensus Mechanism: Blockchain networks use consensus mechanisms to agree on the state of the ledger. Common consensus algorithms include Proof of Work (used by Bitcoin), Proof of Stake, and Delegated Proof of Stake. These mechanisms ensure that all nodes in the network reach an agreement on the validity of transactions.
Blocks and Chains: Transactions are grouped together in blocks, and each block is linked to the previous one, forming a chain of blocks. This chain structure ensures the immutability of past transactions since altering one block would require changing all subsequent blocks, which is computationally infeasible.
Cryptography: Cryptographic techniques, such as hashing and digital signatures, are used to secure transactions and control access to the blockchain. Private and public keys are employed to verify ownership and facilitate secure transactions.
Smart Contracts: Some blockchain networks support smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. Smart contracts automatically execute and enforce the terms when predefined conditions are met.
Public vs. Private Blockchains: Public blockchains are open to anyone and are maintained by a distributed network of nodes. Private blockchains, on the other hand, are restricted to a specific group of participants and are often used by businesses or organizations for internal purposes.
Use Cases: Blockchain technology has applications beyond cryptocurrencies. It is used in various industries, such as finance, supply chain, healthcare, and more, to create transparent, secure, and tamper-resistant systems.
Mining and Validators: In Proof of Work systems, miners compete to solve complex mathematical puzzles to add a new block to the blockchain. In Proof of Stake and other consensus mechanisms, validators are chosen to create new blocks based on factors like the amount of cryptocurrency they hold or other criteria.
Scalability and Interoperability: Challenges related to scalability and interoperability are actively addressed in the blockchain space. Different blockchain projects are working on solutions to handle a larger number of transactions per second and facilitate communication between different blockchain networks.
