One of the most celebrated features of blockchains is their decentralization. Nodes are generally operated all over the world. Blockchains are also normally publicly available, which means that anyone can participate in the network and see the transactions on the chain. Decentralization is important in a number of ways.

1. Due to the fact that everyone in the network owns the data, it is virtually impossible to alter the data without the whole network noticing and opposing the discrepancy.
2. This protects the integrity of the data contained in the ledger.
3. Through this mechanism, the ledger is also able to solve the double-spend problem.

• What is decentralization?

  Decentralization ensures that there is no single point of failure or breakdown. Traditional databases usually have their data stored in servers located in one location. This provides an avenue of failure because if one server is compromised, then the whole network will likely be affected. However, it is not possible to compromise a blockchain ledger in this way due to the sheer number of nodes connected to the network.

• What does “immutable” mean? 

  Blockchains are immutable. That means once a transaction is accepted into a data set that is added to the ledger as a block, it is very difficult–if not impossible–to change any information contained therein. This is facilitated through the algorithm through which nodes add new data to the ledger. In the case of the Bitcoin network, this is the proof-of-work protocol.

  In order to add new blocks to a blockchain, nodes must participate in the activity, which requires them to use the processing power contained in their computers. This is known as the consensus mechanism. Running a consensus mechanism incurs a cost on the user. This means that for an attacker to try to change or otherwise amend any information or data on the ledger, he or she would require an enormous amount of energy which is implausible to acquire, especially in the case of a large network.

• Takeover risk in a Blockchain?

  An attacker would have to gain access to over 51 percent of the network in order to launch an attack of this sort. While this has happened in a number of smaller networks, it is “yet” to happen with larger networks like Bitcoin. The risk of such an attack falls as more nodes join a network, thus it is a self-limiting challenge.

While cryptography helps the network link all blocks in the blockchain and enable and promotes immutability, it is possible for nodes within a network to split a chain in two. This happens, for example, when the majority of the participants in a network agree to upgrade to a new code. This may be as a result of a security issue (as was seen in the Ethereum network after the DAO hack) or in response to a system upgrade (as was witnessed with SegWit in Bitcoin).

The two types of forks are hard forks and soft forks:

• Hard forks lead to the creation of a new blockchain with its own native cryptographic asset
• Soft forks simply change some part of the underlying software but continue with the original blockchain

For instance, as a response to the DAO hack, the Ethereum community implemented a hard fork resulting in two different digital currencies, ethereum classic (ETC) and ether (ETH), running on two different blockchains. Hard forks are also a way through which a number of Bitcoins have come into existence. For instance, litecoin (LTC) is a fork of Bitcoin while bitcoin private (BTCP) is a result of a co-fork between Bitcoin and Zclassic.

The blockchain idea has turned out to be a platform that a broad range of applications can be built on top of. It’s still a very new and rapidly developing technology, but many experts have described blockchain’s potential to change the way we work and live as being comparable to the potential public internet protocols like HTML had in the early days of the World Wide Web.

The Litecoin and Bitcoin Cash blockchains operate in a very similar way to the original Bitcoin blockchain. The Ethereum blockchain is a further evolution of the distributed ledger idea; because unlike the Bitcoin blockchain, it’s not solely designed to manage digital money.

Think of the Ethereum blockchain as a powerful and highly flexible computing platform that allows programmers to easily build all kinds of applications leveraging the blockchain (That being said Ethereum is still a cryptocurrency and certainly can be used to send value to another person).

For example, imagine a foundation or charity that wants to send money to a thousand people every day for a year. With Ethereum, that would only take a few lines of code. Or maybe you’re a video game developer that wants to create items like swords and armor that can be traded outside of the game itself? Ethereum is built on blockchain technology and is designed to do that, too.

As we prepare to head into the third decade of blockchain, it’s no longer a question of “if” old-school companies will catch on to the technology—it’s a question of “when.”