Blockchain - Simply Explained

Intro

A blockchain is a digital record of transactions. Each transaction is recorded on a block, and multiple blocks are linked together to form a chain. This chain is distributed, meaning that copies of it are stored on multiple computers (also known as "nodes") around the world.

Features

One of the main features of a blockchain is that it is decentralized, meaning that it is not controlled by a single entity such as a bank or government. Instead, the network of computers that make up the blockchain is responsible for verifying and recording transactions. This makes it difficult for any one person or group to manipulate the record of transactions.

Another important feature of a blockchain is that it is transparent and secure. All transactions are recorded on the chain and can be viewed by anyone, but they are also encrypted, making it difficult for anyone to alter or tamper with the record of transactions.

Blockchain behind the scenes

A blockchain is a decentralized, distributed database that stores a growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data.

Here's an example of how a blockchain works:

Imagine that Alice wants to send Bob some money over the internet. Alice initiates the transaction by sending a message to the network indicating that she wants to transfer a certain amount of money to Bob. This message, called a transaction, is broadcast to all the nodes in the network.

The nodes, or computers, in the network verify the transaction by checking that Alice has the necessary funds and that she has not already sent the money to someone else. Once the transaction is verified, it is added to a block, along with other transactions that have been verified around the same time.

The block is then cryptographically hashed, and the hash is added to the previous block in the chain, forming a chain of blocks, hence the name "blockchain." This chain of blocks is then distributed to all the nodes in the network.

The transaction is now complete and the money has been transferred from Alice to Bob. Because the transaction is recorded on multiple blocks in the chain and the chain is distributed across the network, it is very difficult to alter the transaction retroactively without the consensus of the network. This makes a blockchain an secure and transparent way to record transactions.

Conclusion

Overall, a blockchain is a way of securely and transparently recording transactions digitally, without the need for a central authority.