What is Blockchain?

What is Blockchain? A Beginner's Guide

When you hear the word "blockchain", you probably think of Bitcoin or other cryptocurrencies. Although blockchain is the technology that powers these digital currencies, its potential goes far beyond money. At its core, a blockchain is a secure, decentralized, and immutable digital ledger.

Imagine a traditional ledger in a bank. Only the bank has a copy of it, and they control all the information. If that ledger is lost or tampered with, it can cause serious problems.

Now, imagine that same ledger, but instead of just the bank having a copy, everyone in a specific network has an identical copy. If someone tries to change a record in their copy, the change will not match what everyone else has, and it will be immediately rejected. This is the fundamental idea behind blockchain.

How Does Blockchain Work?

The name itself gives a big clue. Blockchain is made up of "blocks" of data linked in a "chain".

✳️ Blocks: A block is a digital container of data. Each block contains a list of transactions, such as a record of who sent what to whom. It also contains a unique digital fingerprint called a hash.

✳️ The Chain: What makes it a chain is that each new block contains the hash of the previous block. This creates a secure and chronological link. If someone tries to change the data in an old block, its hash would change. This would break the link to the next block in the chain, making tampering easy to detect and prevent.

✳️ Decentralization: The real magic is that this entire chain of blocks is not stored in one place. It is distributed across thousands of computers, or "nodes", around the world. Since no person or group controls the entire network, there is no central point of failure or attack. This makes it incredibly secure and transparent.