Blockchain facts for kids
A Blockchain (or block chain) is a chain of blocks that contains information that needs to be kept secure. Once the information is entered into the blockchain, it cannot be changed easily because there is no central server. Instead, blockchain stores data at the same time across many computers. This makes it almost impossible for someone to hack into a computer and steal the data.
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History
Blockchain was invented by Stuart Haber and Scott Stornetta in 1991 as a tool to keep digital records accurate and safe. In 1995, computer scientist Nick Szabo came up with the idea of "bit gold," a currency that has no physical backing but can be used to pay for things. Stefan Konst took the idea of blockchain technology further in 2000 by presenting cryptographic secured chains and his ideas for how to use them.
In 2008, developers using the pseudonym Satoshi Nakamoto wrote a paper explaining how to use blockchain. The next year, Nakamoto made it available to the public for transactions made using bitcoin. In 2014, blockchain began to be used as a way to securely manage other information as well.
Uses
Blockchain makes trade easier and keeps accurate records.
- When a person requests a transaction, the information is sent to a peer-to-peer (P2P) network of computers called nodes.
- The network of nodes uses algorithms to validate the transaction and the user. Information that is validated can include cryptocurrency, medical records, identity documents, food supply records, and voting records.
- Once the information has been verified, it is added to a new block which is then added to a chain of blocks that already existed. At this point, if the transaction involves payment or receipt of payment, the transaction is considered finished.
- More information is added to the blockchain in the same way, which makes a long chain of information.
Benefits
Blockchain has benefits for individuals and companies that use it:
- Security: One node cannot add, update, or remove data. If it happens in one place, the updates spread quickly throughout the network.
- Cost efficiency: Using blockchain brings down a company's expenses because there is no middle-man or third party that needs to be paid.
- Permanence: every transaction is permanently recorded.
- Easy tracking: Every transaction has an audit trail, so tracking something to its original source is easy.
Images for kids
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Blockchain panel discussion at the first IEEE Computer Society TechIgnite conference
See also
In Spanish: Cadena de bloques para niños
