What is a Blockchain?

The present definition of blockchain is the one referring to the Bitcoin technology developed by Satoshi Nakamoto, in which the blockchain is an integral part of it; unlike the new term ‘blockchain’ introduced by different companies and authors to refer to Bitcoin technology as a whole.

A blockchain, also known as a distributed ledger, is a distributed database that records blocks of information and interleaves them to facilitate retrieval of information and verification that this data has not been changed. The information blocks are linked by hash pointers that connect the current block with the previous one and so on until the genesis block is reached.

The blockchain is stored by all those nodes in the network that are kept in sync with it.

blockchain structure
Blockchain structure. Source: Bitcoin and Cryptocurrency Technologies from Princeton University.

Each block belonging to the blockchain contains information regarding the transactions related to a period of time (grouped in a structure called Merkle Tree), the cryptographic address (hash pointer) of the previous block and a unique arbitrary number (nonce).

Structure and information contained in a block of a blockchain. Source: Bitcoin White Paper.

Cryptographic hash function

The information contained in each block is registered in the form of a cryptographic hash, which allows easy verification, but makes it impossible to recreate the input data. Bitcoin uses the SHA-256 cryptographic hash function which implies that its hash pointers are of a fixed size of 256 bit.

A hash function is any function that can be used to map data of an arbitrary size and convert it to data of a fixed size in a reasonable amount of time. The values generated by a hash function are called hashes, hash codes, or simply hashes.

Merkle Tree function

The transactions or data are recorded in each block of the blockchain in a cryptographic hash pointer structure called the Merkle tree, due to its inventor Ralph Merkle. This structure groups the blocks of information into pairs and generates a hash for each block of data. Then, the generated hashes are grouped together again in pairs and generate a new hash that in turn is grouped with another one and is repeated up the tree until reaching a single block, the root of the tree, which is called the root hash pointer (root hash) and is registered in the address of the current block (block hash) in order to reduce the space occupied by each block.

Also, this hash pointer structure allows traversing any point in the tree to verify that the data has not been tampered with. As with the blockchain, if someone manipulates any data block at the bottom of the tree, it will cause the hash pointer one level higher up to not match, and even if you continue to manipulate this block, the change will eventually propagate to the top of the tree where it will not be able to manipulate the hash pointer that we have stored because it belongs to another structure (blockchain) in which a hash has also been generated using the root hash as input. So again, any attempt to manipulate any piece of data will be detected by just registering the hash pointer at the top.

Hash Merkle Tree
Merkle Tree structure. Source: Wikipedia.


In cryptography, the term nonce is used to refer to a value that can only be used once. This unique number, or nonce, is a random number issued by miners through the Proof of Work (PoW) that serves to authenticate the current block and prevent the information from being reused or changed without doing all the work again.

Digital assets based on blockchain technology like Bitcoin offer excellent investment opportunities, although they present a high level of risk. To invest in cryptocurrencies it is necessary to use the services of a secure and consolidated cryptocurrency exchange such as Coinfield. You can find more information in the following review:

Coinfield exchange review

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