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What is a blockchain? How do they work?

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Like the name indicates a block chain is a chain of blocks that contains information. This technique was originally described in 1991 by a group of researchers, and it was originally intended to timestamp digital documents so that it's not possible to backdate them or to tamper with them almost like a notary. However, it went by mostly unused until it was adapted by Satoshi Nakamoto in 2009 to create a digital cryptocurrency Bitcoin. Now, a block chain is a distributed ledger that is completely open to anyone. They have an interesting property once some data has been recorded inside a block chain.

It becomes very difficult to change it. So how does that work? Well, let's take a closer look at a block. Each block contains some data. The hash of the block and the hash of the previous block. The data that is stored inside a block, it depends on the type of block chain, the bitcoin blocks in, for example, stores the details about a transaction in here, such as the sender receiver and the amount of coins. A block also has a hash. You can compare a hash to a fingerprint. It identifies a block and all of its contents. And it's always unique, just as a fingerprint. Once the block is created, it's hash is being calculated. Changing something inside the block will cause the hash to change. So in other words, hashes are very useful when you want to detect changes to blocks. If the fingerprint of a block changes, it no longer is the same block.

The third element inside each block is the hash of the previous block. And this effectively creates a chain of blocks. And it's this technique that makes the block chain so secure. Let's take an example. Here we have a chain of three box. As you can see. Each block has hash and the hash of the previous block. So block number three points to block number two. And number two points to number one.

Now, the first block is a bit special. It cannot point to previous blocks because while it's the first one, we call this block the Genesis block. Now, let's say that you tamper with the second block. This causes the hash of the block to change as well. In turn, that will make block three. And all following blocks invalid because they no longer store a valid hash of the previous block. So changing a single block will make all following blocks invalid. But using hashes is not enough to prevent tampering.

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