The blockchain is the underlying technology that powers Bitcoin. It’s often called the “Internet of money” because it provides a decentralized way to verify transactions and keep track of them for all to see. While there are many different types of blockchains, this article will focus on some common differences between them.
A Beginner’s Guide To The Different Blockchains, Explained
In this article, we’ll explain the difference between a blockchain and a distributed ledger. We’ll also cover some of the most popular blockchains available today, including Bitcoin and Ethereum.
To understand why there’s so much buzz around blockchain technology, let’s first take a look at what it actually is. At its core, blockchain is an open-source technology that enables data to be stored securely without access control by using cryptographic validation processes.[1] This means that information can be shared across multiple computers in real time and transactions are recorded permanently on the network.
The simplest way to think about blockchains is as distributed ledgers (or decentralized databases). Instead of having a single entity controlling all records in one place—like a bank does with its own centralized database—there are many copies held by different entities that must agree before new records can be added or changed.[2] The consensus mechanism ensures that everyone has access to all versions of history so they can check their accuracy with other copies while also making sure no one tampers with or deletes past entries.[3]
What Is a Blockchain?
A blockchain is a distributed database that maintains a continuously growing list of data records. Each block contains a timestamp and the connection to the previous block, thus creating an immutable chain of data. Blocks are linked to one another through cryptographic functions and form what we call “the blockchain”.
The process of adding new blocks to this chain is called mining: miners use their computing power to solve complex mathematical problems, which then validate transactions on the network and add them to the ledger as new blocks. In return for their work (and in order to avoid spam), these miners receive rewards – usually in form of cryptocurrency tokens that they can trade or hold onto if they believe the value will increase over time (this is due to inflation caused by increased supply).
There are different types of blockchains
There are multiple types of blockchain. Public, private and hybrid blockchains come in different flavors. Here’s how they differ:
- Public blockchains are open to everyone on the internet and rely on a type of consensus algorithm called proof-of-work (POW). This means that any individual can contribute to the network by running software which validates transactions and adds them to a public ledger. These networks often reward miners with tokens for contributing their computing power to the network.
- Private blockchains are controlled by one organization or company and only accessible by those invited. They use permissioned consensus algorithms instead of POW like Ethereum does for example, so that only certain individuals can validate new blocks on the chain or create new assets within it (i.e., cryptocurrency). They have slower transaction times than public chains due to reduced scale but offer greater privacy protection because transactions aren’t visible without authorization from a trusted source such as Google Inc., Facebook Inc., etcetera; anyone who wants access must go through an application process before gaining access – this helps prevent abuse from bad actors looking for ways around security measures set forth by regulatory bodies like FINRA for example.”
- Hybrid blockchains are a combination of public and private blockchains. They’re used for enterprise applications, which means that they’re more secure and scalable than both public and private blockchains.