A blockchain is a distributed and a decentralized digital ledger that can be used to record transactions and other data across numerous computers in a peer-to-peer network. It can also be defined as a distributed encrypted database like a spreadsheet that is duplicated thousands of times across a network of computers. This network is designed to regularly update this spreadsheet. It is a subset of distributed ledger technologies.
Blockchain comprises a chronological chain of blocks. A block refers to a set of transactions that are bundled together and appended to the blockchain. In the Bitcoin blockchain, the miner nodes bundle unconfirmed and valid transactions into a block. Each block contains a given number of transactions. In the Bitcoin network, every miner must solve a cryptographic puzzle to propose the next block. This process is known as ‘proof of work’ that requires significant computing power.
Timestamping is an important feature of blockchain technology. Each block is timestamped, with each new block referring to the previous block using the cryptographic hash. Combined with cryptographic hashes, this timestamped chain of blocks provides an immutable record of all transactions in the blockchain.
A block in the blockchain primarily consists of four pieces of metadata:
- The reference to the previous block
- The proof of work, also known as a nonce
- The timestamp
- The Merkle tree root for the transactions included in the block.