At its core, blockchain technology creates a chain of blocks that are interconnected. Each block contains a timestamp, a data set, and a unique identifying code called a “hash.” These blocks are digitally signed by their creators, linking them to the previous block in the chain, thus creating an immutable and tamper-proof data chain.
In a decentralized blockchain network, no single entity manages the system. Instead, network users must reach a consensus on the validity of new blocks added to the chain. This consensus is achieved through a process known as mining, where powerful computers compete to generate a valid hash code. The first miner to find the solution is rewarded, often with cryptocurrencies like Bitcoin. The validated block is then added to the chain, creating a transparent record that allows users to securely transfer and store their data.
The decentralized nature of blockchain networks ensures that information can be tracked and verified without relying on a single entity. This characteristic makes blockchain highly secure and resistant to cyberattacks, making it particularly valuable in industries such as finance and healthcare, where data accuracy and security are paramount.