To fully understand the concept of Blockchain, it is important to study how blockchains are operated by Bitcoin. Bitcoin (like any database) also needs a set of computers to store the blockchain. This blockchain for Bitcoin is a special type of database that stores every Bitcoin transaction ever made. In the case of Bitcoin and unlike most databases, these computers are not all under the command of a single authority and each computer or group of computers is operated by a different person or group of people.
Imagine a company has a server consisting of 10K computers with a database containing all of its client's account information. This company has a repository that houses all these computers under one management system and has full control over each of these computers and all the information it contains. Similarly, Bitcoin is made up of thousands of computers, but each computer or group of computers holding the blockchain can be located anywhere on earth Also, they are all run by separate individuals or groups. These computers that make up the Bitcoin network are called nodes.
In the Bitcoin model, blockchains are used in a decentralized manner. However, there are also private blockchains with computers that make up a particular network, which are centralized and operated by a single entity.
Each node included in a blockchain has a complete record of data stored in the blockchain since its establishment. Data for Bitcoin is the entire history of all Bitcoin transactions. If there is an error in the data of a node; the node can reference thousands of other nodes to fix itself. That way, no node in the network can change the information held in it. Therefore, the history of transactions in the blocks that make up Bitcoin's block chain cannot be undone.
If a user interferes with Bitcoin's transaction log, all other nodes cross reference each other and the wrong information easily identifies the node that was added. This system helps to create a precise and transparent sequence of events. In the case of Bitcoin, this information is a list of transactions, but it is also possible for a blockchain to hold various information such as legal contracts, state definitions or a company's product inventory.
To change the way this system works or the information stored in it, the majority of the computing power of the decentralized network must agree on those changes. This ensures that the changes to be made are in the majority interests.
- CandleFocus Editor
Decentralization