Let’s start with the basics.
Spreadsheets like those in Excel or Google Sheets easily store information. You probably keep a spreadsheet to manage your business or personal expenses. It’s a great tool for one person or a small group of people.
When there’s a large amount of data that needs to be accessed by multiple users, a database is needed.
A database usually structures its data into tables. A blockchain behaves differently.
Data is gathered in groups or blocks.
A block has a limited storage capacity and when the block is full, it is closed. It is then linked to the previously filled block.
This continues and a chain of blocks are linked together – brilliantly referred to as the blockchain.
One superpower of the blockchain is that the data cannot be changed or deleted. It is immutable.
Here’s how that works.
A blockchain doesn’t live on a single server farm in a warehouse. The blockchain data is spread out amount many network “nodes” throughout the world.
According to bitnodes, there are currently 15,181 Bitcoin nodes. It’s decentralized.
Spreading out the data allows for redundancy. Unlike a company that stores all its data in one location, if a power outage or natural disaster occurs at a network node, the blockchain isn’t impacted.
It also ensures that the data isn’t changed. If someone running a node is a bad dude (yes, there are hackers who aspire to steal bitcoin) and alters data on their node, the other nodes in the blockchain will not be impacted.
Blocks are stored linearly and chronologically. It’s an ingenious way to keep records.
Blockchains can be public or private.
The Bitcoin blockchain is public or “permissionless.” Anyone can join the network.
All blockchains are secured with cryptography.
Private blockchains are being used by companies such as Walmart for supply management. Healthcare providers are storing their patients’ medical record. Property records in county recorders’ offices are ripe candidates for blockchain.
Go to Investopedia to learn more.