A blockchain is a distributed ledger technology (DLT) or list of entries – similar to a stock ledger – that is maintained by various participants in a network of computers and allows data to be stored globally on thousands of servers. Blockchains use cryptography to process and verify transactions on the DLT, which makes it difficult for any one user to gain control over the network or the entries included. This can provide comfort to users and potential users of the DLT that entries included in the ledger are secure. Some examples of blockchains are Bitcoin and Ethereum, which are used to create and track transactions in their native digital assets, respectively, bitcoin and ether.
If helpful, here are some additional basic concepts that you should educate yourself on before considering contributing capital to any blockchain-based project, ICO, token sale or related offering:
- What is an initial coin offering (ICO)?
- What is a digital asset, coin, or token?
- What is a digital asset trading platform (“exchange”)?
- Who can issue digital assets, coins, or tokens?
- Things to consider when determining whether to contribute capital to an ICO (or related offering)