Learn

So how do Blockchain-based applications like Bitcoin and Ethereum validate transactions without a central authority?

In the blockchain, there are many participants in the network that are constantly checking to ensure that each transaction is valid. Each participant is a computer that owns a copy of the blockchain. These participants cross-reference their copy of the blockchain each time a new block is being introduced. Because this validation depends on multiple participants, the digital record is “decentralized”.

In order for a new block to be added, 51% of all of the participants in the blockchain network must verify that the new block is not fraudulent. Once a block has been verified as a valid transaction, it is added to each participant’s copy of the blockchain.

By having the majority of participants validate a new transaction, the blockchain removes the need for a central authority and automates the completion of transactions, reducing transaction fees while ensuring a high level of security.

Key Terms:

  • Blockchain Network: The blockchain network and blockchain are terms used interchangeably. They represent the entire blockchain from the structure itself to the network that it is a part of.
  • Decentralization: The concept in which participants work together to validate transactions without relying on a central authority.
  • Participant: A client that owns a copy of the blockchain and verifies transactions across the network.

Sign up to start coding

Mini Info Outline Icon
By signing up for Codecademy, you agree to Codecademy's Terms of Service & Privacy Policy.

Or sign up using:

Already have an account?