Blockchain is a technology that underlies cryptocurrency. The essence of the blockchain technology lies in the name: it consists of two words block and chain. That is, a blockchain is a chain of blocks. Not simple, but consistent and connected. This structure gives the blockchain an important advantage - each subsequent block contains information about all previous ones. What does this give? It is impossible to change the information in the old blocks.
How blockchain connected with cryptocurrencies? Blockchain - the basis of cryptocurrency. The blocks contains the transaction data between market participants. In order to write data to a new block, it is first sent for encryption calculations. The miner processes its transactions with the help of its computing equipment; when the processing of a block ends, it is added to the circuit along with information from the previous blocks. Thus, it is not possible to add a transaction "backdating" or change an already entered one. Such a feature of the blockchain and cryptocurrency gives a number of advantages:
- Anonymity - network members do not reveal their identity, since only hash is used to transfer digital coins - a unique address - the name of each participant.
Irreversibility - a transaction cannot be canceled or blocked. Therefore, when transferring from one cryptocurrency wallet to another, you need to carefully consider checking the address of the transfer, in case of an error, you will not be able to return the money.
Decentralization - the absence of a central authority that can regulate the network, and all participants in the network - are equal.
The direct nature of transactions - in crypto on the blockchain, all transactions are sent directly, p2p, without an intermediary, unlike banks or other payment systems.