What is cryptocurrency?
Bitcoin or other digital currency isn’t saved in a file somewhere; it’s represented by transactions recorded in a blockchain. Blockchain is like a global spreadsheet or ledger, which leverages the resources of a large peer-to-peer bitcoin network to verify and approve each Bitcoin transaction. Each blockchain, like the one that uses Bitcoin, is distributed: it runs on computers by volunteers around the world; there is no central database. The blockchain is public: anyone can view it at any time because it resides on the network, not within a single institution charged with auditing transactions and keeping records. And the blockchain is encrypted: it uses heavy-duty encryption involving public and private keys–like the two-key system to access a safety deposit box–to maintain virtual security. You needn’t worry about the weak firewalls.
Every 10 minutes, all the transactions conducted are verified, cleared, and stored in a block that is linked to the preceding block, creating a chain. Each block must refer to the preceding block to be valid. This structure permanently time-stamps and stores exchanges of value, preventing anyone from altering the ledger. If you wanted to steal a Bitcoin, you’d have to rewrite the coin’s entire history on the blockchain in broad daylight. That’s practically impossible. So the blockchain is a distributed ledger representing a network consensus of every transaction that has ever occurred. Like the World Wide Web of information, it’s the World Wide Ledger of value—a distributed ledger that everyone can download and run on their personal computer.