PrivacySwap is one of the cryptocurrency projects built on the Binance Smart Chain (BSC). BSC is a blockchain network built for running smart contract-based applications. But what exactly is a blockchain?
A blockchain, in a nutshell, is a digital, ever-growing list of data entries. A list like this is made up of multiple chunks of data that are structured chronologically, linked and secured by cryptographic proofs.
The first blockchain prototype was created in the early 1990s by computer scientist Stuart Haber, and physicist W. Scott Stornetta used cryptographic techniques in a blockchain to protect digital documents against data manipulation. Haber and Stornetta’s work undoubtedly influenced the work of Dave Bayer, Hal Finney, and many other computer scientists and cryptography enthusiasts, ultimately leading to the establishment of Bitcoin, the first decentralized electronic cash system (or simply the first cryptocurrency). Under the pseudonym Satoshi Nakamoto, the Bitcoin whitepaper was published in 2008.
Although blockchain technology predates Bitcoin, it is a critical underlying component of most cryptocurrency networks, serving as a decentralized, distributed, and public digital ledger responsible for maintaining a permanent record (chain of blocks) of all previously confirmed transactions.
Also Read: Bitcoin technical analysis for beginners
Blockchain transactions occur within a peer-to-peer network of computers scattered globally (nodes). Each node keeps a copy of the blockchain and contributes to the network’s functionality and security. This is what distinguishes Bitcoin as decentralized digital money with no borders, no censorship, and no need for third-party intermediation.
As a distributed ledger technology (DLT), the blockchain is purposefully designed to be highly resistant to manipulation and fraud (such as double-spending). This is because, as a database of records, the Bitcoin blockchain cannot be altered or tampered with without an impractical amount of electricity and computational power — which means the network can enforce the concept of “original” digital documents, making each Bitcoin a very unique and un-copyable form of digital currency.
The so-called Proof of Work consensus algorithm is what allowed Bitcoin to be built as a Byzantine fault tolerance (BFT) system, which means that its blockchain can continue to operate as a distributed network even if some of the participants (nodes) exhibit dishonest behavior or inefficient functionality. The Proof of Work consensus algorithm is a necessary component of the Bitcoin mining process.
Blockchain technology can also be adopted and utilized in other areas such as healthcare, insurance, supply chain, IoT, and so on. Although it was created to function as a distributed ledger (on decentralized systems), it can also be used on centralized systems to ensure data integrity or save operational costs.