What is Blockchain?

A blockchain is a distributed database that maintains a continuously growing list of records called blocks. Each block contains a timestamp, transaction data, and a cryptographic hash of the previous block, creating an immutable chain.

How Blockchain Works

1. Transaction Initiation

A user initiates a transaction (sending cryptocurrency, executing a smart contract, etc.)

2. Broadcasting

The transaction is broadcast to a network of computers (nodes)

3. Validation

Network participants verify the transaction using consensus mechanisms

4. Block Creation

Verified transactions are grouped into a block

5. Chain Addition

The new block is added to the existing chain, creating a permanent record

Key Features

Decentralization

  • No single point of control
  • Distributed across thousands of computers
  • Resistant to censorship

Immutability

  • Once recorded, data cannot be altered
  • Cryptographic security
  • Tamper-evident

Transparency

  • All transactions visible on public blockchains
  • Auditable history
  • Open verification

Types of Blockchains

Public Blockchains

  • Bitcoin, Ethereum
  • Anyone can participate
  • Fully decentralized

Private Blockchains

  • Controlled access
  • Used by enterprises
  • Faster but less decentralized

Consortium Blockchains

  • Multiple organizations
  • Shared control
  • Industry-specific uses

Blockchain Beyond Cryptocurrency

  • Supply chain tracking
  • Healthcare records
  • Voting systems
  • Real estate transactions
  • Digital identity

Blockchain Trilemma

The challenge of achieving all three:

  1. Security - Resistance to attacks
  2. Decentralization - Distributed control
  3. Scalability - Transaction throughput

Most blockchains optimize for two at the expense of the third.