In today's digital era, blockchain technology has become very popular and attracted the attention of many people, closely related to the world of cryptocurrency.
In a financial context, "ledger" means a record or ledger that records transactions and balances. In simple terms, we can think of Excel as an example of a ledger. Likewise with your bank passbook, it can also be considered a ledger.
Typically, the ledger is held by a single authority entity such as a bank or financial institution. However, maintaining and managing a ledger in a traditional way requires huge resources and costs. Apart from that, there is a risk of fraud, manipulation and misuse of data by parties who have access to the ledger (such as the recent leak of BRIS customer data, money laundering by corruptors, etc.). This is where blockchain provides a solution.
Blockchain is a technology that allows recording transactions in a decentralized and secure manner. This means that the ledger is no longer held by one central entity, but is distributed across a network of connected computers. Every computer in the network (or "node") has the same copy of the ledger that can be accessed and verified by all participants in the network.
In blockchain, each transaction is recorded in a separate block. Each block contains transaction data and a timestamp. Once a block is completely filled, it is linked to the previous block, forming an unbroken chain of transactions. That is why this technology is called "blockchain".
New transactions can only be added to the blockchain after they have been validated by a majority of network participants. This validation is carried out through a consensus process, in which network participants reach agreement on the validity of transactions. This ensures that all participants agree regarding the integrity of the data recorded in the ledger.
Because each block is connected to the previous block and has a timestamp, changing one block will affect all subsequent blocks. That's what makes blockchain so secure, because it's difficult to change existing data without getting the consent of the majority of network participants. Thus, blockchain can provide a high level of security and data integrity.