The Dawn of ₿itcoin

In 2008 Satoshi Nakomoto invented Bitcoin. Bitcoin is a virtual currency that runs on the blockchain. Referring back to our town example, Bitcoin enabled the town's ledger tracking system to work over the internet, making it faster, cheaper, and scalable.

The way it works is that anyone can sign a transaction using their wallet, similar to a signature, and send it out to all the computers in charge of recording transactions. Then about every 10 minutes the computers check every other computer's list and the list most people agreed on gets confirmed and called a block.

The computers then continue recording new transactions people send out on a new block, but they also make sure to write down a reference to the last block. This reference is a way to keep track of past transactions.

Now imagine a malicious user is trying to change a past transaction to get more money in their account. Every 10 minutes the chain of blocks (blockchain) will be verified with everyone else's copy. The majority of the verifiers will notice that there is a block with incorrect information. The block that is incorrect gets rejected and the blockchain continues like nothing happened. The chain with the incorrect block can either become synchronized with the other blocks to get the correct information or branch off(fork) creating a new path with no users.

This is a simple example of how a blockchain works. Now we have a system where anyone can send a transaction efficiently and safely.