INTRODUCTION TO BLOCKCHAIN

What is blockchain?

To understand smart contracts, one must first understand the technology upon which they are created: blockchain. Blockchain has become a buzzword since the eruption of cryptocurrencies, in particular Bitcoin. Blockchain technology is interesting not only because of its ability to host alternative currencies, but because it offers an immutable, transparent, and distributed ledger for digital transactions. This means that compared to traditional information recording systems, such as privately-owned databases managed by a single administrator, the way information is stored across shared networks of participants results in a permanent, irreversible history. This history is shared across networks of participants rather than being managed by a single administrator. 

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Records or transactions are stored by linking “blocks” securely on an electronic ledger. From there, any new information is added to a ledger linked to the last block created, thus creating a continuously growing chain of information. The growing chain itself needs to be approved by a significant majority of the participants as new blocks are added in order to detect fraud. This allows the decentralized network to be self-executable as it will check mistakes as it goes.

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For more information on how a blockchain works, see this short video explanation from Simply Explained.