What Is Blockchain Technology And How Does It Work

What Is Blockchain Technology And How Does It Work

What Is Blockchain Technology And How Does It Work

 Almost everyone has heard of blockchain. But not everyone understands how it works. This article will show you what blockchain technology is and how it works.

What Is Blockchain?

Blockchain is a technology used to create digital databases containing information such as online transaction records. Information is collected through the internet network. In the simplest terms, blockchain can be described as a data structure that stores transactional records while ensuring security, transparency, and decentralization.

You can also think of it as a chain or record stored in the form of blocks controlled by a single authority. Blockchain is a distributed ledger that is completely open to anyone and everyone on the network. Once information is stored on the blockchain, it is very difficult to modify or modify it.

Every transaction on the blockchain is guaranteed with a digital signature that proves its authenticity. Due to the use of encryption and digital signatures, the data stored on the blockchain is incorruptible and irreversible.

Blockchain technology allows all network users to reach an agreement, commonly known as consensus. All data stored on the blockchain is digitally recorded and has a common history available to all network users. In this way, the chance of any fraudulent activity or duplication of transactions is eliminated without the need for a third party.

How Do Blockchains Work?

Blockchain is a block chain that contains data or information. Despite being discovered before, the first successful and popular application of Blockchain technology appeared in 2009 by Satoshi Nakamoto. He created the first digital currency called Bitcoin through the use of Blockchain technology. Let's understand how the blockchain works.

Each block in the blockchain network stores some information along with the hash of the previous block. Hash is a unique mathematical code that belongs to a particular block. If the information in the block is changed, the hash of the block is also subject to modification. Block connection via a unique hash key is what makes a blockchain secure.

While transactions occur on the blockchain, there are nodes on the network that validate these transactions. In the Bitcoin blockchain, these nodes are referred to as miners and they use the proof-of-work concept to process and validate transactions on the network. For a transaction to be valid, each block must refer to the hash of the previous block. The transaction will take place when the hash is correct. If a hacker tries to attack the network and changes the information of a certain block, the hash attached to that block will also be modified.

Violations will be detected because the modified hash will not match the original. This ensures that the blockchain is immutable as if any changes made to the block chain will be reflected across the network and will be detected easily.

Blockchain Features


Blockchain is decentralized which means that no single person or group has authority over the network as a whole. While everyone on the network has a copy of the distributed ledger with them, no one can modify it on their own. This unique feature of the blockchain enables transparency and security while providing power to users.

Peer-to-Peer Network

By using Blockchain, interaction between two parties through a peer-to-peer model is easy to do without the requirement of a third party. The blockchain uses a P2P protocol that allows all network users to hold identical copies of transactions, enabling approval via machine consensus. For example, if you want to make transactions from one part of the region to another, you can do it with the blockchain alone in a few seconds. In addition, hassles or additional fees will not be deducted from the transfer.


The immutability property of blockchain refers to the fact that any data that has ever been written to the blockchain is immutable. To understand immutability, consider sending email as an example. Once you send an email to a group of people, you can't retrieve it. To find a way out, you have to ask all recipients to delete your email which is quite boring. This is how immutability works.

Once the data is processed, it cannot be changed. In the case of blockchains, if you try to change the data of one block, you have to change the entire blockchain that follows it because each block stores the hash of the previous block. Changes in one hash will cause changes in all following hashes. It is very complicated for one person to change all the hashes because it requires a lot of computational power to do so. Therefore, the data stored in the blockchain is not vulnerable to changes or hacker attacks because it is immutable.


With the immutability inherent in the blockchain, it becomes easier to detect any data tampering. Blockchains are considered tamper-resistant because any change even in a single block can be detected and resolved smoothly. There are two key ways to detect tampering namely, hashes and blocks.

As previously explained, each hash function associated with a block is unique. You can think of it like a block's fingerprint. Any changes in the data will cause changes to the hash function. Since the hash function of one block is linked to the next block, in order for a hacker to make changes, he has to change the hashes of all blocks which is quite difficult to do.

Blockchain Types

Public Blockchain

As the name suggests, public blockchains are permissionless ledgers and can be accessed by anyone and everyone. Anyone with access to the internet has the right to download and access it. Apart from that, one can also check the overall history of the blockchain along with making any transaction through it. Public blockchains usually reward their network users for carrying out the mining process and maintaining the immutability ledger. An example of a public blockchain is the Bitcoin Blockchain.

The public blockchain enables communities around the world to exchange information in an open and secure manner. However, the obvious disadvantage of this type of blockchain is that it can be compromised if the rules surrounding it are not strictly enforced. Moreover, the rules that were decided upon and implemented initially had little scope for modification at a later stage.

Private Blockchain

As opposed to a public blockchain, a private blockchain is one that is only shared between trusted users. Control of the entire network is in the hands of the owner. Moreover, private blockchain rules can be changed according to different levels of permissions, exposure, number of members, authorizations etc.

The Ptivate blockchain can run independently or can be integrated with other blockchains as well. It is usually used by companies and organizations. Hence, the required level of trust among the users is higher in private blockchains.


Blockchain is a technology that records all information collected through a network that is above the internet to ensure security, transparency and decentralization. The information recorded on the blockchain can be anything. Blockchain is also the core technology for cryptocurrencies like bitcoin.

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Resa Risyan

Just an ordinary person who wants to share a little knowledge, hopefully the knowledge I provide can be useful for all of us. Keep in mind! Useful knowledge is an investment in the afterlife.

Also, read the article about What is a Text Editor, Functions and Examples (COMPLETE). And see you in another article. Bye
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