What is blockchain?

When it comes to blockchain, many think it is both mysterious and intricate. What exactly is it? What's it for?

In a narrow sense, a blockchain is a chained data structure that combines blocks of data and information in a chronological order and records the blocks in encrypted form as a distributed ledger that cannot be tampered with or forged. Broadly speaking, blockchain technology uses block-type data structures to validate and store data, uses distributed node consensus algorithms to generate and update data, and uses encryption to ensure data transmission and to access security. The script code contains smart contracts for programming and manipulating data in new distributed infrastructures and computing models.

Currently, the information storage is mostly centralized, leading to the situation that if a server is down or crashes, not only the server will stop operating, but also websites or applications relying on the server will be affected, and consequently, a lot of data may be lost. For example, on December 7, 2021, Amazon Web Services (AWS), the Cloud Computing Services of Amazon, suffered a massive failure and the services of a number of websites relying on AWS cloud services were interrupted synchronously.

A blockchain, on the other hand, is a database of linked blocks where information is shared and stored together. In a blockchain network, there is no centralized hardware or management organization, the rights and obligations of the nodes throughout the network are equal, and the data in the system is, in essence, jointly maintained by all nodes therein. That is, even if one block goes offline or fails, other blocks can still maintain the blockchain network in normal operation.

In a traditional centralized network, an attack on a central node can destroy the entire system. In a decentralized blockchain network, however, an attack on a single node cannot control or destroy the entire network, and controlling more than 51% of the nodes in the network is just the beginning of gaining control.

Of course, we are talking about the blockchain network in an ideal state. In the practice of applications, it's hard for most blockchain projects to meet the requirements of decentralization, security and scalability at the same time. For example, private and consortium blockchains must rely on centralized servers.