Understand blockchain technology core concepts, how it works, and real-world applications.
What is Blockchain?
Blockchain is a distributed ledger technology (DLT) that stores transaction data in cryptographically linked blocks. Each block contains the hash of the previous block, ensuring data immutability.
Core Properties
- Decentralization: No single controller; the network is maintained by numerous nodes
- Immutability: Data written to the blockchain is extremely difficult to alter
- Transparency: All transaction records are publicly verifiable
- Consensus: Proof of Work (PoW) or Proof of Stake (PoS) ensures network consistency
Blockchain Applications
- Cryptocurrency: Digital currencies like Bitcoin and Ethereum
- Smart Contracts: Self-executing programmable agreements
- DeFi: Decentralized financial services
- NFT: Non-fungible tokens, digital asset ownership proof
- Supply Chain: Tracking products from production to consumption
Layer 1 vs Layer 2
Layer 1 is the base chain (e.g., Ethereum), Layer 2 is a scaling solution built on L1 (e.g., Polygon, Arbitrum) to improve speed and reduce costs.