Blockchain is a revolutionary technology that creates an open, distributed ledger that records transactions in a verifiable and permanent way. Mathematical equations are utilized to ensure that the database of transactions is permanent by linking every transaction to those that came before - no transaction can be altered without breaking the entire chain! The chain structure also ensures that the record of transactions is chronologically ordered and viewable by all participants. Because the ledger is mathematical, it can be programmed like a computer to automatically trigger transactions.
When you make a Bitcoin transaction, you announce to the system you would like to transfer a balance of Bitcoin on the ledger from one owner to another. There transactions are grouped into a block and members on the system will confirm the transactions in the block are legitimate. Once a block is confirmed, the ledger, or blockchain, is updated to reflect the most recent transactions.
The blockchain technology promises to reduce transaction costs significantly by eliminating the "middle men" of accountants, lawyers, brokers, and bankers. In essence, blockchain decentralizes the trust function, which is great news since trust is probably the most critical component of business. The more trust, the better for everyone.
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