Blockchain

AAA

DEFINITION of 'Blockchain'

A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.

INVESTOPEDIA EXPLAINS 'Blockchain'

The blockchain is seen as the main technological innovation of Bitcoin, since it stands as proof of all the transactions on the network. A block is the ‘current’ part of a blockchain which records some or all of the recent transactions, and once completed goes into the blockchain as permanent database. Each time a block gets completed, a new block is generated. There is a countless number of such blocks in the blockchain. So are the blocks randomly placed in a blockchain? No, they are linked to each other (like a chain) in proper linear, chronological order with every block containing a hash of the previous block.

To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Blocks, meanwhile, are like individual bank statements. 

Based on the Bitcoin protocol, the blockchain database is shared by all nodes participating in a system. The full copy of the blockchain has records of every Bitcoin transaction ever executed. It can thus provide insight about facts like how much value belonged a particular address at any point in the past. 

The ever-growing size of the blockchain is considered by some to be a problem due to issues like storage and synchronization. On an average, every 10 minutes, a new block is appended to the block chain through mining. 

RELATED TERMS
  1. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network ...
  2. Bitcoin Mining

    Bitcoin mining is the process by which transactions are verified ...
  3. Bitcoin

    A digital or virtual currency that uses peer-to-peer technology ...
  4. Peer-To-Peer (Virtual Currency)

    The exchange or sharing of information, data, or assets between ...
  5. Paper Wallet

    A paper wallet is an offline mechanism for storing Bitcoins. ...
  6. Litecoin

    Launched in the year 2011, Litecoin is an alternative cryptocurrency ...
Related Articles
  1. Investing Basics

    The Easy Way To Measure Bitcoin's Fair Market Value: A Do-It-Yourself Guide

    How do you determine the fair market value of a currency that has appreciated faster than the shares of even the hottest technology stocks?
  2. Investing News

    Will Bitcoin And Walmart Force Western Union To Change Its Business Model?

    Western Union is recognized across the globe for providing a fast, efficient way to move money. Just walk into a Western Union office and you can transfer money to friends, relatives or business ...
  3. Investing Basics

    U.S. Marshals To Auction Off Seized Bitcoins

    The U.S. Marshals are auctioning off 29,656.51306529 bitcoins seized from drug site Silk Road. To be eligible, you'll need $200,000.
  4. Investing Basics

    Why Is Bitcoin's Value So Volatile?

    Bitcoin's value fluctuates due to a confluence of factors, including media hype and perceived value.
  5. Investing Basics

    Could One Bitcoin Come To Be Worth $1 Million? Q&A

    "If Bitcoin lives up to its potential and becomes the working capital of international trade, it could be used for cross border transactions."
  6. Active Trading

    What Is Bitcoin

    Bitcoin is the first decentralized digital currency. It is also sometimes referred to as a virtual currency or a crypto-currency.
  7. Investing Basics

    What is Bitcoin Mining?

    How does Bitcoin get released into circulation?
  8. Investing Basics

    The Strange New World Of The Bitcoin Exchange Futures Market

    We explain the basics of the Bitcoin exchange and futures market.
  9. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  10. Forex

    Bitcoin's Main Stumbling Block: Navigating The Law

    Coders created Bitcoin to be decentralized and independent of governments and banks. Authorities are still struggling to create a legal framework.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center