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A blockchain is a digital ledger or growing list of records, called blocks, that is run by a network of computers running in a peer-to-peer (P2P) configuration. It is a collection of data and transactions that are stored and processed by computers around the world, all working together. This configuration uses the network of computers and cryptography to create a system that is secure, transparent, and at the same time anonymous.

The reason it is called the blockchain is because of its structure. All of the data that is broadcast to the blockchain is put into blocks, which are subsequently linked to the previous block, creating a chronological order of blocks, or a blockchain. This chronological order of transactions or records is immutable, meaning that once something is broadcast and recorded on the blockchain, it cannot be altered. This ensures that no one can change history to their liking.

An important feature of blockchains is that they are usually decentralized. With centralized platforms, data has to pass through one singular point, usually a server or hub. As a result, you cannot send or receive any information without it going through that one single point. Some examples of centralized platforms are Facebook, the National Vehicle Licensing Department, or virtually all major banks. Decentralized platforms, however, do not require information to pass through one single point. Instead, many points are connected, creating a peer-to-peer network configuration. An example of a decentralized platform is Bitcoin or Ethereum.

Decentralization is the main component of a blockchain that creates its security because instead of one centralized server holding all the information, many computers around the world store a copy of this information. This makes losing information almost impossible because it’s unlikely that all of the independent computers around the world will crash or lose your data. Even if one computer in the network crashes or its data is tampered with, there are still plenty of computers that have a copy of the information, keeping your data safe and secure.

All of the information about transactions on the blockchain is transparent and public, except for users’ personal information and the content of their messages. This means that although all of the transactions are easily seen, the person who made the transaction is completely anonymous. Users are identified by usernames or user IDs, which don’t reveal any personal information about the user. This transparency of information is the factor that makes it possible for the network to verify that specific transactions were made on the blockchain and anonymity gives the users peace of mind that no one can see their personal information.

Cryptography is one of the tools used in blockchain technology to keep data safe. Cryptography is a practice that uses complex mathematical processes to encrypt and lock information and keep hidden from third parties. Once data is encrypted it can only be decrypted by a unique key specific to that data. Without that key, the data is meaningless and of no use.

The combination of decentralization, cryptography, and transparency gives a blockchain its unique characteristics. The blockchain’s decentralization makes the information stored on it extremely secure because a copy of the information is kept on many computers across the world. Blockchain also increases transaction speeds as there are no lengthy confirmation times and the transaction moves directly to the recipient, not through multiple points of contact. The use of cryptography keeps user’s personal information and the messages sent through the blockchain secret accessibility. The blockchain doesn’t need any physical institutions to function. It is fully digital and the only requirement is a connection to the Internet. All these factors combine to make blockchain technology one of the biggest revolutions in recent history.