What is blockchain and how does it work?

There are some fundamentals to understanding blockchain, including the notion of a distributed ledger. Using cryptography to keep exchanges secure, blockchain provides a decentralized database, or “digital ledger”, of transactions that everyone on the network can see.

What are on-chain transactions?

On-chain transactions refer to cryptocurrency transactions that occur on the blockchain and remain dependent on the state of the blockchain for their validity. On-chain transactions are considered valid only when the blockchain has been updated to reflect the transactions on the public ledger.

How are blockchain transactions validated?

Transactions that occur on a blockchain must be validated by a number of the network's participants, who are called miners. A transaction is only valid once the participants verify the transaction and a consensus is reached about its validity. The transaction details are then recorded on the block and distributed to the network's participants.

What are the different types of blockchains?

Other types of blockchains include consortium blockchains and hybrid blockchains, both of which combine different aspects of public and private blockchains. Research from the McKinsey Technology Council suggests that by 2027, up to 10 percent of global GDP could be associated with blockchain-enabled transactions.