At the heart of Bitcoin's operation lies the blockchain technology. A blockchain is a distributed and decentralized ledger that enables the secure recording and verification of transactions. It operates on a network of computers, known as nodes, where each node maintains a copy of the blockchain.
The blockchain consists of a series of blocks, with each block containing a set of transactions. These transactions are grouped together, hashed, and linked to the previous block, forming a chain-like structure. Once a block is added to the chain, it becomes virtually impossible to alter or tamper with the data contained within it due to the cryptographic properties of the hashing process.
The decentralized nature of the blockchain ensures that no single entity has control over the network. Instead, consensus mechanisms, such as Proof of Work (PoW) or Proof of Stake (PoS), are employed to validate and agree on the state of the blockchain. This consensus mechanism prevents fraud, double-spending, and ensures the integrity of the network.
Beyond its use in cryptocurrencies like Bitcoin, blockchain technology has found applications in various sectors. It has the potential to revolutionize industries such as finance and supply chain management.