The key innovation of Bitcoin is the blockchain. Blockchain is a particular type of Distributed Ledger Technology (DLT). Essentially the Blockchain is a transactional database that is the 'master public ledger'. It records every transaction ever undertaken on the network. It is open for public inspection to anyone who is on the network.
Every time a transaction is undertaken, and a majority of nodes on the network agree that the transaction is valid, a block of data is produced. This block is time-stamped and appended to the existing Blockchain. Similarly, the previous block has been dated and time-stamped. In an identical way, the previous block is chained to the block before it that had been time-stamped, and through the iterative process, a chain of time-stamped blocks stretch all the way back to the genesis block that was originally mined by the founder of Bitcoin, Satoshi Nakamoto, on 3 January 2009. In the way, the blocks of data are said to form a 'Blockchain' that contains the entire history of transactions undertaken on the network.
Identical copies of the Blockchain are collectively distributed, controlled and maintained across computer servers or nodes that form the network. Nodes are essentially people operating Bitcoin client software. Bitcoin is a permission less network which means anyone can join or leave the network as they please.
Essentially , the Blockchain architecture uses a distributed ledger that creates a de-centralised model in which no central regulator has oversight of the cryptocurrency. The integrity of the ledger is maintained through two stage cryptographic process. This is different from traditional banking model which is a centralised one. Banks maintain a ledger with a central bank who oversees the issue of fiat currency and maintains the integrity of the banking system through regulation and supervision of the banks.
As users enter into transactions, the Blockchain needs to be continuously updated for the transactions that they are entering into. However, it is crucial that the integrity of the data is maintained to ensure that a bitcoin is only spent once.
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