Like the internet, the blockchain has serious robustness built in. Because the blockchain stores identical blocks of information across the entire network, it cannot:
*- Come under the control of a single entity
*- Have any single failure point
Bitcoin came about in 2008 and since then the blockchain has worked
without any serious disruption. In fact, any problems that have occurred have come from mismanagement or hacking, i.e. human error or intent rather than an issue with the concept of the blockchain. The internet has endured properly for more than 30 years and that is a good omen for a technology that continues to grow and be developed. The blockchain works because of the following:
It cannot be corrupted and is transparent ;
The blockchain network exists under what is known as “a state of consensus” and, every 10 minutes, it will check on itself. This is a kind of auditing system; each transaction that happens in each ten-minute interval is reconciled and each of these 10-minute groups of transactions is called “a block”. Two very important things come out of this:
Transparency – the blockchain data is stored on the network and is defined as public meaning all transactions are verified by many people and everyone can see them
Incorruptible – because it is so transparent, there is no way to edit or change any transaction without using vast amounts of computing power to get around the network.
Of course, it is possible, in theory for this to happen but in practice, it is highly unlikely. Not only does it require vast amounts of power, if a hacker were able to gain Bitcoins in this way, but the value of the coins would also be destroyed and there would be no point in owning them.
A network made up of nodes;
A node is a computer that is connected to the network via a Bitcoin client. This client carries out the jobs of validating each transaction and relaying them. The nodes each receive a copy of the blockchain automatically when they join the network. Put together, these make up an incredibly powerful sub-level network thus providing us with a revolutionary new vision of how the internet could work.
Each node is a network administrator and voluntarily joins the network. It is this that makes the network decentralized – there is no central authority and everyone is there by choice. However, each of these has a decent incentive for joining – the chance to win a few Bitcoins. This is done through ‘mining’ and later I will be talking more about Bitcoin mining and how to do it. Really though, the nodes are competing against one another to solve ‘puzzles’ – not in the
conventional sense though, these are very difficult mathematical and computational puzzles that take a significant amount of power to solve.
Right now, it is estimated that there are more than 700 cryptocurrencies like Bitcoin but the blockchain is moving on from that and there are several other potential applications in development or active already.