Understand Blockchain: A Quick Breakdown

Want to dabble in cryptocurrency but find it hard to grasp the concept of blockchain technology?

Well, you’re not alone.

We were feeling the same way when we started to look into it.

What is Blockchain? What does it do? Why is it important?

Diving in, we found our brains turning into scrambled eggs and had to take a step back.

After some careful review, we finally have a decent grasp on the idea and now, with a little better understanding, let’s see if we can break it down for you, too.

Blockchain Explained

Here’s how we see it…

Imagine a blockchain as a digital ledger, akin to a giant notebook shared among a vast network of computers.

Each page of this notebook represents a “block” containing a list of transactions, similar to entries in a traditional accounting ledger, say.

Now, picture each block being linked to the one before it, forming a chain of interconnected blocks.

Hence, the term “blockchain.”

But here’s where it gets interesting.

Unlike a regular notebook, where entries can be altered or erased, the blockchain is immutable or, rather, not susceptible to change.

Once a transaction is recorded in a block and added to the chain, it becomes permanent and tamper-proof.

This immutability is achieved through “cryptographic hashing”.

Each block contains a unique code called a Cryptographic Hash, which is generated based on the data within the block.

Any alteration to the block’s data would change its hash, alerting the entire network to foul play.

Moreover, the blockchain is decentralized, meaning it’s not stored in a single location but replicated across thousands of computers, or nodes, in the network.

This decentralized structure ensures that no single entity has control over the entire blockchain, enhancing security and reliability.

In essence, the blockchain serves as a transparent and secure record-keeping system for cryptocurrency transactions.

It helps eliminate the need for intermediaries like banks or governments to validate and authorize transactions.

By visualizing the blockchain as a digital ledger distributed across a network of interconnected computers, it helps us better understand its role as the backbone of cryptocurrencies and why it enables trustless and transparent transactions in the digital realm.

Hopefully this also gives you a slightly better understanding of how the concept works and its key use with cryptocurrency.

Want something a bit more visual?

Here’s a video we found and appreciate:

Best of luck in your endeavors and happy investing!