How Does Blockchain Work?

 🧱 What is Blockchain?

A blockchain is a distributed digital ledger that stores data across many computers (called nodes). It’s designed to be:


✅ Immutable (you can’t easily change records)


✅ Transparent (everyone can see the same history)


✅ Decentralized (no single authority controls it)


Think of it as a shared Google Sheet that is:


Readable by everyone


Append-only (no one can delete or overwrite rows)


Copied and synced across thousands of devices


🔁 How Blockchain Works (Step-by-Step)

Let’s say Alice wants to send 1 Bitcoin to Bob. Here's what happens behind the scenes:


🧩 1. A Transaction Is Created

Alice initiates a transaction:


text

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Send 1 BTC from Alice’s wallet to Bob’s wallet

🔐 2. Transaction Is Digitally Signed

Alice uses her private key to sign the transaction.


This proves the transaction is authentic (like a digital signature).


🌐 3. Transaction Is Broadcast to the Network

The signed transaction is shared across the peer-to-peer (P2P) blockchain network.


Every node gets a copy.


✅ 4. Nodes Validate the Transaction

Nodes check:


Is Alice’s signature valid?


Does she have enough BTC?


If valid, it moves to the next stage.


⛓️ 5. Transaction Is Added to a Block

Verified transactions are grouped into a block.


Blocks also contain a timestamp and a hash of the previous block.


🔨 6. Consensus Happens

Depending on the blockchain, nodes reach agreement via:


Mechanism Used By How It Works

Proof of Work (PoW) Bitcoin Miners solve complex puzzles to earn rights

Proof of Stake (PoS) Ethereum, Solana Validators stake coins and are selected at random


📦 7. Block is Added to the Chain

Once consensus is reached, the new block is added to the chain.


Every node updates its own copy of the blockchain.


📝 8. Transaction Is Final

Bob now sees 1 BTC in his wallet.


The transaction is permanently recorded in the ledger.


🔄 Example: Blockchain as a Logbook

Imagine:


Each page in a logbook = a block


Each page contains a list of transactions


Every page links to the one before it using a page number and a unique seal (hash)


To change one page, you’d have to rewrite all pages after it — impossible if 10,000 people have a copy


🔐 Core Technologies Behind Blockchain

Tech/Concept Purpose

Hashing Creates unique fingerprints of data

Digital Signatures Verifies sender identity

Distributed Network Removes central point of control

Consensus Algorithm Ensures all copies stay in sync

Smart Contracts Auto-execute agreements (e.g. Ethereum)


🪙 Real-World Uses of Blockchain

Industry Example Use Case

Finance Bitcoin, Ethereum (digital payments, DeFi)

Supply Chain IBM Food Trust (track goods from farm to shelf)

Healthcare Patient records stored securely and privately

Voting Tamper-proof, verifiable electronic voting systems

Identity Decentralized ID systems (e.g., Microsoft Entra)


🚫 Can Blockchain Be Hacked?

It’s very hard because:


You’d need to control 51% of the network to fake a block


Each block is cryptographically tied to the previous one


But it’s not immune:


Poor smart contract code can be exploited


User wallets can be hacked (e.g., via phishing)


✅ Summary

Feature Description

Immutable Records can't be changed

Transparent Everyone can see the same truth

Decentralized No central authority

Trustless Doesn’t require trust between users

Learn Blockchain Course in Hyderabad

Read More

What Is Blockchain? A Beginner’s Guide


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