A revolution of its own, the blockchain technology is the driving force for all bitcoin transactions over the network. Blockchain is a network of various ‘nodes’ connected together, working independently, but in complete sync. What is fascinating about this technology is that it is completely transparent, and no single node can control the network. Since its inception in 2008, the blockchain has not had a failure, which remains the reason why the currency remains trusted by millions of people across the globe.
In simple words, the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but anything that holds value attached to it. Each ‘node’ in the blockchain solves complex mathematical problems in order to generate a hash, which connects the previous transaction to the current one, and also transfers and relays the current transaction. It also contains the hash of the previous ‘block’. A block can be defined as a group of transactions on the blockchain, which are grouped and sent together. Each block on the blockchain also contains the timestamp and transaction data of the block.
This mechanism ensures that a public ledger of all transactions is created, which can be viewed by anyone and at any given point of time. One can simply search for the transaction using the txHash and searching for the same on any bitcoin block explorer, the most common one being blockchain.info.
This technology also provides for a reward for the nodes which solve the complex mathematical problems, which is known as block reward. Currently, the reward for relaying one block is 12.5 BTC. This process is called bitcoin mining, and extremely complex machines and miners are used in this process.
As complex as it may sound, to explain the bitcoin blockchain in a nutshell, one can consider that it is a network of nodes connected together, validating and relaying transactions which are happening across the globe, for a certain incentive paid. The bitcoin blockchain has been attacked many times since 2008, but has never failed, and the network has succeeded in overcoming these minor kickbacks. The only way that hackers can actually succeed in stealing or ‘hacking’ bitcoin is through exploiting loopholes in a cryptocurrency exchange. In 2013, one of the largest bitcoin exchanges, Mt. Gox was attacked and bitcoins were stolen. The users could not be paid back as the attackers were next to impossible to trace, and bitcoin transactions, being discreet, could not be tracked down.
Apart from Bitcoins, blockchain, now, is being seen as a heavy potential technology for various verticals like international remittances, defense, supply chain management and the like. Firms such as JP MorganChase, Foxcomm, Visa, IBM, HP, and many others are betting big on blockchain startups, as they are seen to have an extremely high financial return, and are also viewed as the gateway to a new generation of storing data in a decentralized fashion.