What is a Blockchain? How does it Work?

        According to Merriam Webster dictionary, Blockchain can be defined as, "a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network"

       In simple words, a Blockchain is a digital book that records monetary transactions that are conducted by people digitally and which is publicly available and is not controlled by one person or organisation.

•     Why this Technology is called Blockchain?

     The word 'Blockchain' is a combination of two words, 'Block' and the 'Chain'. Hence, as the word suggests, it is the chain of blocks or stack of digital information, stored in a database which is public.

     The 'Blocks' on the Blockchain consists of three kinds of information:-

1. The first thing the blocks store in them is the information about the transaction which includes time, date and amount of your transaction.

2. The second thing the blocks store is the information about the participants of the transaction. The block will record your name and the party name with whom you had a transaction with. The block will record your transaction without using any identifying information in this can your real name but a 'digital signature' which works as a username.

3. The third and the most important thing the blocks record is the thing that distinct them from each other. Like you and me have distinct name which distinct us from each other, every block stores a unique code known as 'hash' so that we can distinguish them from the other block.
     
       So how much data can a block store in it? A single block can actually store as much as 1 MB of data. This means that a single block can store thousands of transactions, depending on the size of transactions.

• How does Blockchain Works?

     When a block stores new data it is added to the Blockchain. A Blockchain is created when multiple blocks are strung together. Hence, for a block to be added to the Blockchain, 4 conditions needs to be fulfilled.

1. A transaction must occur. For a block to be added to a Blockchain, digital information should be stored on it. This digital information is stored on a block only when a transaction takes place.

2. The transaction must be verified. After your transaction takes place, it must be verified. In blockchain, the verification is done by the network of computers. These networks include thousands of computers (5 million in case of Bitcoin) spread worldwide. When you conduct a transaction, that computer network rushes to verify that your transaction happened in the way you said it happened or not. Specifically, they just confirm the transaction date, time, the amount and the participants. All of these happens in a second.

The Bitcoin Transactions are verified by networks of computers which include 5 million computers spread worldwide

3. The transactions must be stored in a block. Your transaction in stored in a block, after it gets verified. The information related to the transaction such as transaction amount, your digital signature, another party's digital signature are all stored on the block. It is there accompanied by hundreds or thousands of transactions.

4. That block must be given a hash. Every block must be given a hash or a unique code that will differentiate it from the other block. The block is also given the hash if the most recent block added to the blockchain. Once the hashes are added, the block is ready to be added to the blockchain.

      After the block is added to the blockchain, it is publicly available for anyone to view.