A blockchain is also known as ‘distributed ledger technology’, the key word here is ledger.
A ledger is simply somewhere where we record and store transactions, data, or exchanges that occur between two or more parties. Our civilisation has invented many systems to keep accurate ledgers, we actually invented writing to help us with this important task. The first ever discovered form of writing is generally considered to be Sumerian cuneiform, which emerged in ancient Sumer (modern-day Iraq) around 3400 BCE. Cuneiform was used primarily for record-keeping, and it was used to write a variety of texts, including economic transactions, legal documents, literature, and religious texts.
Now, fast forward a few thousand years, we have complex digital ledgers embedded into the backbone of society, governments and the global economy. These ledgers aim to deliver a consensus about the true nature of our economic and social interactions, creating an environment of trust. Traditionally, Financial institutions are the keepers of these important ledgers which have allowed markets to grow and scale worldwide. Although this achieves a global reach, these ledgers are held and controlled by centralised intermediaries.
Advancements in ledger technology has led to an alternative decentralised system using blockchains. Blockchain’s take on the responsibility of maintain a ledger of transactions and data on a secure, transparent and immutable digital record, managed over a network of computers (nodes). Each node in the network has an updating copy of chronologically ordered transactions that are being written to the blockchain (in real-time). No longer is the ledger held on one central server (like a bank), but a distributed network of nodes are capable of maintaining and managing all transactions on the blockchain securely.
see Centralised vs Decentralised
Briefly explained, blockchains can use a variety of consensus mechanisms (how a network agrees to verify data using cryptography proofs) to create a ‘trustless’ system where all network transactions are verified before being added 'on-chain'.
Bitcoin and other altcoins use blockchain technology to secure their ledgers and networks. Developments in blockchain technology has produced ‘smart contracts’, ‘layer 2' and a suite of other pragmatic blockchains that facilitate an ecosystem of decentralised applications (dApps), decentralised exchanges (DEXs), decentralised autonomous organisations (DAOs), non-fungible tokens (NFTs) and other novel functions that improve online interactions (Web3) . Traditional financial systems and services are being challenged by blockchain technology, and many believe this is where humanity's digital future is heading - away from centralisation and toward decentralised systems that enable consensus building for a global community.
