In the simplest explanation, blockchain is a decentralized online ledger where transactions are added and verified by a network of users. It is a way of recording transactions between two parties efficiently and in a verifiable and permanent way. Blockchains solve two major challenges for digital transactions, controlling the information and avoiding duplication, at the same time.
The ledger isn’t stored in any single location; it is distributed but not copied to every party in the network. This decentralized ledger cannot be altered and transparency data is embedded within the network as a whole; every node is an “administrator” of the blockchain. The goal is to see a transaction end-to-end and reduce vulnerabilities.
When a transaction is executed online, the block is broadcasted to every party in the peer-to-peer network. Those in the network approve the transaction is valid. The block then can be added to the chain, which provides an indelible and transparent record of transactions. The network reconciles every transaction that happens in ten-minute intervals, verifying for errors, fraud and inefficiencies.
Blockchain can be utilized beyond accounting applications. For example, self-executing smart contracts can help reduce the operational cost of small and medium sized companies, sharing the wealth beyond large multinationals. This new disruptive technology can be applied to every industry, in one way or another, by reducing cost and increasing efficiency. This technology will be used in records management, recording of events, identity management, and transaction processing and food traceability, to name a few.