What is blockchain? Explained Simply!

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Coinmonks

3 min readJun 17, 2022

Blockchain is a system for storing data in such a way that it is difficult or impossible to alter, hack, or manipulate it.

Technically, it is a distributed database that is shared among the nodes of a computer network (peer-to-peer) to store information electronically in digital format through the use of decentralization and cryptographic hashing.

In simple words, blockchain is:

A digital ledger
Distributed to all members of the network
Decentralized as no authority has supreme power over the system
Encrypted and secured via means of cryptography
Immutable, meaning every change is permanent on the ledger
Consensus, every member of the network follows a consensus mechanism to allow data transaction

What are the blockchain’s main components

Blockchain consists of the following core components:

Node: a computer within the system
Transaction: an actual transaction of value
Block: the data structure where transactions are stored
Chain: a sequence of blocks linked to each other in a specific order
Miners/Validators: Specific nodes that perform the transaction and validate the transaction
Consensus: a mechanism through which networks miners/validators reach the agreement

How is a blockchain created

A blockchain is made up of a series of blocks, each of which is linked to the one before it. Each block has four essential components which make a skeleton for the entire blockchain:

Data: Any information that you want to store securely in the blocks
Hash: Unique identifier assigned to one specific block
Hash of the Previous Block: Includes the previous hash value construct the structure of the blocks
Meta Data: Relevant data regarding the data inside the block (timestamp or block number).

How a blockchain works

Blockchain is a distributed network made up of numerous nodes or computers that operates globally over the internet. Each node has the ability to generate a block, validate a transaction, receive a transaction, and make a transaction. No one can falsify or manipulate the data contained in the blockchain because it is a cryptographically linked chain of blocks (set of records).

The diagram below shows how a blockchain works:

What are the main features of a blockchain?

The four main characteristics of blockchain technology are:

Distributed: All participants and nodes of the network receive a copy of the ledger distributed by blockchain technology. In case, a hard disk on a computer, being part of the blockchain networks, crashes and all the data are lost, then there is no concern as they are all copied by each member (computer) participating in the network
Trustless/Consensus: Blockchain uses consensus mechanism which help the group of nodes active on the network to make decisions. The participants come to an agreement quickly and fast based on the algorithms that run at the core of it, making the network trustless.
Immutable: On the blockchain, every transaction and addition of new data is permanent. Every node on the system has a copy of the digital ledger. To add a transaction, each node must first verify its legitimacy. If the majority agrees that it is correct, it is entered into the ledger. Thus, data cannot be changed or altered. It is immutable as a result of this feature.
Decentralized: The network is decentralized, which means there is no governing authority or one individual in charge of the infrastructure. The network is instead maintained by a collection of computers, making it decentralized.

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What is blockchain? Explained Simply!

What are the blockchain’s main components

How is a blockchain created

How a blockchain works

What are the main features of a blockchain?

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Written by thecryptolearn