A blockchain is a distributed, cryptographically-secure database structure that allows network participants to establish a trusted and immutable record of transactional data without the need for intermediaries. A blockchain can execute a variety of functions beyond transaction settlement, such as smart contracts. Smart contracts are digital agreements that are embedded in code and that can have limitless formats and conditions.
Blockchain software is like any other software. The first of its kind was Bitcoin, which was released as open source software, making it available to anyone to use or change. There are a wide variety of efforts across the blockchain ecosystem to improve upon Bitcoin’s original software.
Historically, databases have incorporated a centralized client-server architecture, in which a sole authority controls the central server. This design means that data security, alteration, and deletion rests with a single point of failure. The decentralized architecture of blockchain databases emerged as a solution for many of the weaknesses of centralized database architecture.
A blockchain system refers to all the aspects and features that go into a particular blockchain, everything from the consensus algorithm to the state machine to cryptographic functions.
When a digital transaction occurs in a blockchain network, it is grouped together in a cryptographically-secure “block” with other transactions that have occurred in the same time frame. The block is then broadcast to the network. A blockchain network is comprised of nodes or participants who validate and relay transaction information.