Blockchain Is a Distributed Digital Ledger
The reason blockchain is so powerful is that it is public. Everyone can access it at any time because it resides on the Internet.
Further, blockchain assets are distributed across a vast, global ledger.
When a transaction happens, it posts around the globe on millions of computers at once. That vast and far-flung record—which is time stamped every 10 minutes, produces a new block.
For accounting purposes, each block produced captures all of the transactions regarding a good or service that have taken place up to that moment of time.
You now begin the next block in the chain.
The Hashing Process
The chain of blocks is formed by hashes. All of the input data for the previous block, which includes anything new, gets an algorithm applied to it. That algorithm generates a fixed-sized output encryption which represents this time-stamped block, which may be on the order of 256-bytes in length.
Input data, though, can be of any size or type:
a favorite song [mp4]
a book or series of books
An image or video
even the entire internet
One way a hash may be used is to seal or tamper-proof a file also called a checksum.
That hash can then be used to calculate the authenticity of documents that are posted online. The hash cannot be forged as it is related to the time of its original publication. That same hash cannot be duplicated later on. So if a file that is supposed to have one hash now shows another, you know it has been tampered with.
Third party intermediaries are not needed. Blockchain handles each task itself.
Because these transactions take place peer-to-peer, the two parties transact without the need for 3rd parties to regulate or act in an intermediary role. Things that intermediaries are ordinarily required for are completely handled by the blockchain:
Authentication / Identification
Clearing payments / Settling
Blockchain tracks all of those functions and is actually more secure than earlier processes because of its decentralized redundancies.
Centralized authorities can get hacked. The blockchain ledger consists of millions of decentralized, time-stamped blocks are recorded simultaneously across the globe. Hacking that mesh of recorded information poses a substantially difficult challenge.
Last but not least, it’s worth noting that when you transact through Ethereum blockchain, smart contracts cycle through automatically as the transaction executes, ensuring that all prerequisites are met before the next stage of the purchase and final payment take place.
For people looking to do business online, you couldn't ask for a better safeguard than the distributed ledger!