Blockchains are distributed databases or ledgers shared across computer networks, with a primary role in cryptocurrency systems. They store data in blocks linked together via cryptography, making it immutable and reducing the need for trusted third parties. Since Bitcoin’s introduction in 2009, blockchain uses have expanded through various cryptocurrencies, decentralized finance applications, non-fungible tokens (NFTs), and smart contracts.

Blockchains work by storing information in blocks linked together via cryptography, with each user collectively retaining control. In Bitcoin, transactions are permanently recorded and viewable to anyone. The blockchain’s transaction process follows a specific process, with each node proposing its own blocks to find a solution to the difficulty target. The nonce value, a field in the block header, is changeable and increases with every mining attempt.

The process of generating hashes is the “proof-of-work,” which consumes computational power and energy. Once a block is closed, a transaction is complete, but it is not considered confirmed until five other blocks have been validated. Confirmation takes the network about one hour, with Ethereum using a random validator from all users with ether staked to validate blocks, which is faster and less energy-intensive than Bitcoin’s process.

Blockchain decentralization involves distributing data among network nodes, creating redundancy and maintaining fidelity. This ensures that no single node can alter information within the chain, making transaction history irreversible. Blockchain transparency allows for easy tracking of transactions, as each node has its own copy of the chain. However, blockchain technology also provides security and trust through linear and chronological storage of new blocks. Changes in data can alter the hash of the block, but not all blockchains are 100% impenetrable. Blockchains are distributed ledgers that use code to create their security level, but vulnerabilities in the coding can be exploited. Overall, blockchain technology offers a secure and transparent way to store and manage data.