Blockchain: What Is It and How Does It Work?

The rapid progression of technology has paved the way for innovations that made many unthinkable become a reality. One of the most notable products of technological advancement is blockchain technology which is becoming increasingly vital in the digital world.

Blockchain is a type of database that collects and stores electronic information in a digital format or computer system. As its name implies, this electronic information or data is grouped by blockchain technology into blocks then chains them together and distributes the chain in a network connected through peer-to-peer nodes.

The recorded data in the new block is chained to the previous block, forming a chain of data. This system or structure creates an irreversible timeline of data when implemented in a decentralized nature. 

Blocks have specific storage capacities, and when a block is filled, it is set in stone, becoming part of the timeline. Blockchain is difficult to tamper with as each block is given an exact timestamp after being added to the chain.

An analogy for understanding blockchain technology is a Google spreadsheet or Doc shared among various computer networks. When people create a file and share it with a group of people, the document is distributed instead of copied or transferred. 

It will then create a decentralized distribution chain where everyone can access the document, and all modifications made are recorded in real-time, making changes transparent.

Essentially, blockchain technology lets people without mutual trust share valuable data in a secure, tamper-resistant way. However, blockchain technology is more complex than the given example. 

This technology is also known for its crucial role in cryptocurrency systems, such as Bitcoin, especially for maintaining a decentralized and secure record of transactions. It can prevent fraud and bring transparency in a scalable way for many uses. For instance, when a hacker alters a blockchain to steal cryptocurrency, all other copies containing the same data will no longer be the same or aligned. Thus, if people were to cross-reference such copies, they would easily identify which one is tampered with and will then be cast away as an illegitimate copy. 

Moreover, it is important to note that while Bitcoin and blockchain are frequently used interchangeably, they are two different terms. The former is a digital currency that uses peer-to-peer technology to facilitate electronic payment. On the other hand, the latter refers to the method of recording cryptocurrency transactions in blocks then securing them with an unchangeable cryptographic signature. 

As the world is increasingly going digital, it is easy to expect the promising success of digital currencies in the foreseeable future. For those who believe in this success, it is advisable for companies under different industries, from supply chains to banking, healthcare, and more, to invest in cryptocurrency Philippines.

In the Philippines, virtual currencies are legalized, which means Bitcoin trading and usage are allowed. Consequently, the Philippine cryptocurrency exchange is regulated by the Central Bank of the Philippines or Bangko Sentral ng Pilipinas. 

For more information about blockchain, read this infographic brought to you by Coexstar PH

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