It seems like a big complex technology. Yes, it’s big but not complex. Blockchain is a decentralized (meaning it is not controlled by one central authority)  global online database that anyone can use from anywhere.  All they just need to have is an internet connection.

So how does it work?

Like the name indicates Blockchain is a bunch of blocks that contain information and are linked to each other in the form of a chain.  This technology was discovered/introduced in 1991 by a bunch of IT researchers.  Bitcoin is the biggest example of Blockchain technology.

I know what you are thinking.  You might be thinking about blocks. Let me explain how blocks store information and how all blocks are linked to each other.  I will not go into the details. I will write a full-fledged article about The blocks in Blockchain.

A block is composed of a Blockheader and a Blockbody.  Blockheader contains

  • Some Data
  • Hash of the block
  • Hash of previous block

And other information like version, current timestamp, bites and nonce.  Let’s explain these three important parts of Block.


Ok!  Let’s me first explain Data

The data that gets stored inside the block depend upon the type of Blockchain. Suppose we are transferring Bitcoin to someone.  Block will store details about the transaction happened between two users like sender, receiver and the amount. Also that block will get added into Bitcoin Blockchain. In that case, the added block is a Bitcoin block and Blockchain  type will be Bitcoin Blockchain.

Same way if we are transferring tax to government through Blockchain, the Block containing tax information will be a tax block and Blockchain type will be a tax Blockchain

Let’s talk about HASH

Hash is a unique identification string of a block which uses Has-256 encryption method which encrypts the input into a 64 character unique id.  In simple words it’s something like a unique fingerprint. It helps in identifying block and all of this content.  Once a block is created its hash is calculated and added to block.

Hash of the previous Block

Every block contains the hash of previous block to make a secure chain of blocks liking to each other.

In the above picture, you will see every bock has Hash and Previous block.  Block 3 is linked with block2 and block2 is linked to block1. Block1 is not linked to any block because it’s the root block of a chain or we can say it’s the starting block on a chain and we can call this a Genesis Block.

Now, you might be thinking of what if someone managed to change hash of a block. Let me tell you one thing. Whenever the block data is changed new hash will get calculated and added to that block.


In this example we just changed the data of block2 and new hash (H62Y) is automatically generated and added to that block.  Now what will happen, the link between block3 and block2 will break. This will make block3 and all the following block invalid because they no longer storing the hash of previous block.  In order to make new hash valid he/she has to change hash for every block and it’s impossible because it is not controlled by one central authority its decentralized network.

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