What Is Blockchain Technology? How it works? Explained Simply Step By Step

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What Is Blockchain Technology? How it works? Explained Simply Step By Step


Welcome to our Blog on what is Blockchain Technology And How it Works, explained simply for the ones who don’t like jargon.

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Understanding BlockChain

Welcome to our blog on what is Blockchain technology and how it works explained simply for the ones who don’t like jargon, we will be taking a good look at the concept of blockchain, why it exists? And many more with a step-by-step approach. So, let’s get started!

What Actually is a Blockchain

what is blockchain?

A blockchain can be understood as a digital public ledger or a database of records.

Each record contains lists of transactions.

The blockchain consists of a network of computers that all have the exact same copy of the records. Whenever, a new transaction is initiated, the transaction is verified by the network and once verified, the transaction is added to the list present in a record. The transactions are added to the list in the form of a Block, a block contains various information. The blocks in the list are connected to each other in a chain. Hence, the name Blockchain. The feature of a blockchain is, once a block is added to the Blockchain, it cannot be altered.

Block getting added in the Blockchain

What is a Block

A Block contains a Cryptographic Hash(a unique encrypted identifier) that gives it a unique identity from other blocks in the chain, relevant data about the transactions it contains and the hash of the previous block. The hash is created through a Cryptographic Hash Function in the block, which is a mathematical algorithm.

Blocks in a blockchain

The blocks are connected in a chain using their hash in a manner, that a block is connected to its previous and next one using each other’s hash. We understood what Blockchain is and what it is made of. Now, let’s understand how it works.

How BlockChain Technology Works

how blockchain works?


Whenever a transaction is made, such as the transfer of cryptocurrency from one person to another, the following process is carried out.

  • The Transaction is verified by multiple computers also known as Nodes on the network.
  • The verification process is done by broadcasting the transaction to the network, this verification process is known as Consensus.
  • There are several different Consensus algorithms that can be used, but the most common one is known as Proof Of Work.
  • In Proof of work, the nodes compete to solve a complex mathematical problem. The first node to solve the problem gets to add the block to the chain and is rewarded with a small amount of cryptocurrency, this process is known as Mining.
  • Once a block is added to the chain, the transactions it contains are considered to be verified and can no longer be altered.
  • This creates a permanent, unchangeable record of all transactions in the blockchain.

block getting verified by the node in a blockchain


Now that we understood how Blockchain works, there is a question to be addressed, How the transactions on the blockchain remain permanent and cannot be tampered? In other words, how it guarantees the safety of all the transaction data?

How it remains Permanent

Blockchains are so designed that it’s nearly impossible for any hackers to tamper with the data in the blockchain.

  • Remember Blocks? Blocks have a deeply ingrained Hash of its own and of the previous block, if someone tries to change the data in the block, the hash of the block will change and will not match with the hash that is present in the next block.
  • When the hash doesn’t match, it will be detected by the algorithm and the transaction will be denied verification.
  • Moreover, if a record is successfully tampered in a Node, there are many other nodes with the same copy of the records which will detect the change in the node’s record and deny its verification.
  • Time factor, a single bitcoin hash change takes almost 10 minutes, considering the amount of blocks in the nodes it would take about a hundred of years, to change the hash of all the nodes to successfully tamper the blockchain.

Blockchain block getting verified by the network

This is a simple yet powerful way to secure the blockchain. We learned a lot about blockchain now let’s consider its applications in the real world.

Also See:
Cryptocurrency Explained In Simple Words
How Crypto Mining Works in 2023
Explaining The Role Of Cryptographic Algorithms In Blockchain Technology
Why Bitcoin Is Going Down? (Danger Future Predictions)
Ethereum, Ethereum Classic and Ethereum Merge Explained
7 Best Cryptocurrency Apps For Beginners With Pros And Cons (2023)

Where is it being used

where is blockchain used?

Blockchain is a decentralized public ledger, meaning there is no one authority or government controlling it, making it a very secure and transparent system. On the other hand, centralized parties such as a bank or any other institution controlled by any authoritative body, (centralized ledger) is vulnerable to tampering in the data because the admin of the database can always change the data in the system in secrecy. Blockchain helped solved this issue by removing the intermediary and bringing more transparency, this helped fasten up various processes, some of the applications of blockchain are:

  • Used in Finance and Banking, due to its transparency and security it is used to create new financial systems such as Cryptocurrency, and streamline the existing processes such as cross-border payment and securities trading.
  • Management of supply chain, it is used to manage the movement of goods in a supply chain and verify the authenticity of the products.
  • Storing Identity information, blockchain’s secure and transparent system can also be used to verify and store identity information.
  • To Facilitate Smart Contracts, blockchain can be used in a self-executing contract with the terms and agreement of the buyer and seller directly written into lines of codes.
  • In Voting Systems, it can be used to create secure and transparent voting systems which can be resistant to tampering.
  • Uses in healthcare, medical records can be stored securely using blockchain.
  • Smooth running of the Government, Blockchain can also be used to create more efficient and transparent government systems by tracking and verifying the authenticity of the documents.

There are endless applications of a blockchain, with new possibilities arising every day. The key is to keep exploring and learning. We learned a lot about blockchain and its workings, if any queries, or you liked the content please make sure to comment down below. Happy learning!

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