How Does a Blockchain Work

There are many moving parts that make the Blockchain work, but let's dive into some of the core components :

Transactions

At the core of a blockchain are the "transactions" - these are the individual pieces of information or actions that are recorded on the blockchain. When someone wants to perform a transaction, such as sending cryptocurrency or updating a digital record, it is broadcast to the network of computers.

Verification by Miners

These computers, known as "miners," then work to verify the legitimacy of the transaction. They do this by solving complex mathematical problems, which helps confirm that the transaction is valid and should be added to the blockchain.

Reaching Consensus

The key to this process is that the miners have to reach "consensus" on which transactions are valid. This distributed consensus model is what makes blockchains resistant to tampering or centralized control.

Creating Blocks

Once a group of transactions is verified, it is bundled together into a "block." This block is then cryptographically linked to the previous block, forming a continuous "chain" of blocks - hence the term "blockchain."

Decentralized Network

The entire blockchain is replicated across many different computers in the network, not controlled by any single entity. This distributed nature is what makes blockchains secure and tamper-resistant.

Growing the Blockchain

As new transactions occur, they get bundled into additional blocks that are cryptographically linked to the previous ones. This creates an ever-growing, tamper-evident chain of information that provides a secure and transparent record of all activity.

Benefits of Blockchains

The decentralized and consensus-driven nature of blockchains is what gives them the potential to transform industries, empower individuals, and enable new types of digital applications and services.