Quick Lessons about Cryptocurrencies and Bitcoin
The Way it Works
When a block stores the new data added to the Blockchain, as its name suggests, it consists of several blocks chained together. For a block to be added to the Blockchain, four things must happen:
- A transaction must occur. Let’s continue with the example of your impulsive purchase. That time when you chose to pay without thinking, going against your best interests.
- The transaction must be verified. After making that purchase, the transaction must be verified. With other public records information such as the National Securities Commission, Wikipedia, or your local library, there is someone in charge of researching new background data entries. With Blockchain, however, that work is left to a computer network. When buying from Amazon, it rushes to the computer network to verify that your transaction occurred in the way you said it did. I.e., the purchase details are confirmed, including the time of the transaction, amount paid, and people involved.
- The transaction must be stored in a block. After your transaction has been accurately verified, it will give the green light. The amount of the transaction, the digital signature, and the company’s digital signature are then stored in a block. There, the transaction is likely to join hundreds or thousands of others like it.
- The block should receive a hash. Not unlike an angel earning his wings, once all transactions of a block have been verified, you should be given a unique identification code called a hash. The block also receives the most recently added hash block to the Blockchain. Once it has the hash, the block can be added to the Blockchain.
When a new block is added to the Blockchain, it will be made available to the public for anyone to see, even for you. If you check out the Bitcoin Blockchain, you will see that you have complete access to the transaction data, along with information about when (“Time”), where ( “Place”), and who ( “relayed by” ) was added to the block in the Blockchain.