They are blocks where data is stored in linear containers so the name called Blockchain. These blocks form a chain, so the name blockchain. Anyone can notice that you’ve placed data there, since it is semi-public and carries your signature. However, only you can unlock what’s there in the block (container). You can do so securely by using the private keys to that data block. Essentially, blockchain is a database with the “header”, where the information is stored as public.

Firstly, blockchain is a semi-public and therefore distributed ledger. That makes it shareable across multiple entities without sacrificing security. What’s more, the ledger is time-stamped. This makes every single transaction verifiable and traceable. All computers on the network can validate every single transaction. That becomes one of the key strengths of blockchain – it automatically prevents double-counting. As a result, the chances of both errors as well as fraudulent transactions are virtually zero. This may appear to be the single most important application of blockchain but there are many more, equally powerful uses of blockchain.

You would’ve noticed by now that being shareable, there’s nothing that is “central” about blockchain. It’s architectured in a way that there’s no central server that dictates transactions – it remains a peer-to-peer network over nodes. Your computer, if a part of the network, can verify transactions happening over the network. You could call it thin computing in its best decentralized format.

Because of this, users can reach out to other users and transact with each other instantly, irrespective of geographical or time-zone differences. There are no intermediaries like a main server to filter or slow down the transaction. Hence, the transaction happens without delay. All nodes on the network have equal importance and can offer their knowledge of all transactions over the network. This goes beyond just being a peer-to-peer network and creates a marketplace for users, a distributed economy. The size of such marketplaces varies greatly in size without compromising the integrity of blockchain.

Though often mentioned in the same discussion, Bitcoin and blockchain are not the same thing. Bitcoin is a virtual currency (or cryptocurrency), while blockchain is the tool that makes virtual currency viable. But while Bitcoin may be the best-known use case for blockchain, there are many others besides.

For example, blockchain allows musicians to get paid directly when consumers buy or listen to a song. The purchasing platforms can be cut out of the process, which also means they don’t take a cut of the revenue. Musicians benefit both financially and from a more direct relationship with their fans.

Another example is online voting. When a vote is cast and recorded in the blockchain, it is very hard to alter. That makes it difficult to commit voter fraud by manipulating votes. Furthermore, every voter would have a complete record at hand and could track the outcome as the vote takes place.

Whenever a transaction is conducted as part of a blockchain, it is recorded and visible to all participants. Blockchain participants can be, but do not necessarily have to be, anonymous. When talking about Bitcoin, the term “pseudonymity” often crops up, referring to a kind of anonymized pseudonym. Even though each user has a unique Bitcoin address, this pseudonym can be linked to their personal information in different ways. A simple example would be a user providing their home address to receive a delivery paid for with a Bitcoin transaction.

Public and private blockchains generally work in the same way; the main difference is who is allowed to participate. A public blockchain is open to anyone who wants to be part of it. The downside is that, due to the large number of participants, verifying transactions takes more time. Bitcoin is a well-known implementation of a public blockchain.

Private blockchains, on the other hand, are controlled by one entity that decides who is allowed to participate. This entity may also set up rules and regulations to govern transactions. Transactions are generally conducted faster within a private blockchain because of the limited number of participants.

In a business context, there is a third option: the consortium blockchain. Here, no single entity has full control; instead, a predetermined set of nodes are allowed to participate. A hypothetical case would be a consortium of ten different companies, with each one authorized to operate a node. This type of blockchain ensures that the transaction information stays among its participants without consolidating power in one place.

Cryptocurrency is ultimately a form of money – it’s just that it happens to be based on a relatively new technology, i.e. blockchain. Because it’s treated as money, one can easily build investment, loan and insurance web aggregator software platforms where transactions can be done using Cryptocurrencies. Thus Cryptocurrencies can become a part of a financial instrument, which would lead to a variety of financial products, both traditional and new-age. That is the innovative power of blockchain.

Loans, investments, trading with options and derivatives and even synthetic instruments can have their blockchain versions. Exchange Traded Funds (ETFs) are one of the many ways.

Anyone reading this post would be clear that the blockchain network basically validates transactions. They could be related to digital money or digital assets. When the network reaches a consensus, the transaction is considered valid. It’s then put into a block (a storage space). This block is added at the end of the chain of previous transactions (if any) to indicate this is the latest block. The entire chain of blocks can be verified at any point of time in future to validate any transaction stored in any block.

So blockchain is a giant transaction processing platform, one that verifies and approves legit transactions, no matter what size the transaction is.

A good way to compare various transaction processing networks is the processing capability, measured in transactions per second (TPS). In 2015, VISA clocked an average of 2,000 TPS on VisaNet, the peak capacity being 56,000 TPS. The same year, PayPal recorded about 155 TPS.

Bitcoin, even a year later, wasn’t impressive. Its TPS ranged around a tiny 5 to 7. But that’s not disappointing. Rapid strides in technology and expected increase in Bitcoin blocks would quickly change this picture. Besides, many blockchains are faster than Bitcoins. Ethereum started with just 10 TPS in 2015, but advanced to 50-100 TPS in 2017 and is targeting 250,000 to 300,000 TPS by 2021.

Besides, private blockchains, for instance, may have fewer restrictions and have operated at 1,000 to 10,000 TPS in 2016. Optimistic figures peg this number at 2,000 to 15,000 TPS in 2017 and almost to unlimited capacity beyond 2021. Linking blockchain output to clustered database technology is expected to reach such ambitious targets set.

While blockchain is a software technology, it can also be thought of as a design approach for software, an approach that attaches a large number of computers to one another and requires them to follow a certain ‘code of conduct’ on how to share or accept information. This ‘code of conduct’ will tell them how to validate interactions and transactions verified by cryptography.

It sounds so natural because that’s what blockchain actually is – networked computers with equal value and following a common set of rules. The important part here is that developers will no longer need to set up servers since all computers in the network have equal rights.

For a perspective, you can compare the Web. In the Web, the HTTP protocol request is forwarded to the server and the server approves or disapproves it. That’s because it enjoys server rights. In the case of blockchain, the same request will be sent to the entire blockchain network.