Blockchain: Beyond Cryptocurrencies
A blockchain is a digital ledger that records transactions across a network of computers. It's not just for cryptocurrencies, but can be used in various industries such as supply chain management and data registries.
The process begins with a user authorizing a transaction using a private key, which creates a digital signature that verifies the instruction came from the relevant key holder. The signed transaction is then broadcast to the network, where nodes apply validation rules and reject instructions that don't meet them.
Once a valid transaction has been selected for a proposed block, the network participant proposes a block, while other participants check it under the consensus rules. If the required process is complete, the network treats the block as part of its accepted history.
In permissionless blockchain systems, participation is generally open under the protocol's rules, reducing reliance on a conventional intermediary. However, this doesn't remove trust altogether; instead, it shifts trust towards the protocol, its implementation, and the incentives and behavior of network participants.