Blockchain is a public ledger that contains all the transaction done in Bitcoin that have been executed till date. Since there are new set of recordings added to it every day, the completed blocks are constantly growing. The blocks are added to the Blockchain in a chronological and linear manner. Every node (a node is a computer attached to the Bitcoin network that performs the task of relaying and validating transactions) is provided with a copy of the Blockchain in downloaded form as soon as it joins the Bitcoin network. You will get information on all the addresses and the balances right from the day of joining to the most recent transactions in the form of a completed block.
Seen as one of the major technological innovations of Bitcoin, Blockchain is an important ledger since it contains all the transactions carried out on the network. Some of the recent transactions in Bitcoin are recorded in a block, which then goes into the block chain as a permanent part and becomes embedded into the database. When a block gets completed, a new one is formed for recording new transactions. Thus, there are innumerable blocks in the block chain recording all the transactions.
So, how are these blocks arranged? Are they arranged randomly or is there a specific order that is followed in arranging these blocks? The blocks in the Blockchain are arranged in a chronological and linear manner. There is a hash of the previous block in each new block that becomes a part of the Blockchain.
Blockchain can be compared to conventional banking transactions, as it essentially works the same way. Just like transactions are recorder in conventional banking, they are also recorded in Blockchain in a chronological order. These blocks in the Blockchain work essentially like the individual bank statements in conventional banking.
All nodes (computers connected to the Bitcoin) share the database based on the Bitcoin protocol. Every Bitcoin transaction that has ever been executed is a part of the Blockchain. You can find all the relative insights about facts including the value that belonged to a particular address anytime during the past. There is a record of everything on the Blockchain.
With issues like synchronization and storage, the ever growing size of the Blockchain is a growing concern for the experts. A new block is added almost every 10 minutes into the chain through mining.
- A brief introduction to blockchain economics – papers.ssrn.com [PDF]
- Blockchain Economic Networks: Economic Network Theory—Systemic Risk and Blockchain Technology – link.springer.com [PDF]
- Blockchain, adoption, and financial inclusion in India: Research opportunities – www.sciencedirect.com [PDF]
- Economics of blockchain – papers.ssrn.com [PDF]
- Some simple economics of the blockchain – www.nber.org [PDF]