How Does Blockchain Work?

 How Does Blockchain Work?

What Is Blockchain Again?

Blockchain is a digital ledger — like a record book — that is shared across a network of computers. It records transactions in a way that is secure, transparent, and cannot be changed.


Let’s break down how it works step by step.


1. A Transaction Happens

Someone sends data — for example, they might:


Send cryptocurrency (like Bitcoin or Ethereum)


Sign a smart contract


Transfer digital assets


This transaction is broadcast to a network of computers, called nodes.


2. The Transaction Is Verified

These computers (nodes) check that the transaction is:


Valid


Not a duplicate


Authorized


This verification is done using a consensus mechanism — common ones include:


Proof of Work (PoW): Computers solve complex puzzles to verify transactions (used by Bitcoin).


Proof of Stake (PoS): Users lock up coins to be chosen randomly to verify transactions (used by Ethereum now).


3. The Transaction Is Added to a Block

Once verified, the transaction is grouped with other verified transactions into a block.


Each block contains:


A list of transactions


A timestamp


A reference to the previous block (called a “hash”)


A unique hash for the current block


4. The Block Is Added to the Chain

The new block is then added to the blockchain — a long chain of blocks that are linked together.


Because each block contains a reference to the one before it, it’s almost impossible to alter any information without changing every block after it — which would require enormous computing power.


5. The Blockchain Is Updated Across the Network

After the new block is added:


A copy of the updated blockchain is sent to every computer (node) on the network.


Everyone sees the same, synchronized version of the ledger.


Why Is This So Powerful?

✅ Decentralized – No single person or company controls it.


✅ Secure – Uses cryptography and consensus to prevent fraud.


✅ Transparent – Anyone can view the history of transactions.


✅ Permanent – Data, once added, can’t be changed or deleted.


A Simple Analogy: The Digital Notebook

Imagine a classroom with a shared notebook (the blockchain). Every student (node) has a copy. When someone writes a new page (a transaction), everyone must agree that it's accurate before they add it to their notebooks. Once it’s added, it becomes a permanent part of the book.


Conclusion

Blockchain works by combining technology (encryption), math (consensus algorithms), and community (nodes working together) to create a secure, trusted system — all without needing a central authority.

Read More

What Is Blockchain? A Beginner’s Guide

History of Blockchain: From Bitcoin to Now



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