How does Blockchain work?

By Aniket Bose. Edited By Swastik Patel. 

A blockchain, such as Ethereum, is primarily a distributed database that is shared amongst the multiple nodes of a computer network. As a database, blockchains store valuable information electronically in a digital format. They are most commonly known for their vital role in cryptocurrencies, such as Bitcoin or Ether, for maintaining a secure and decentralized record of transactions.

How Does Blockchain Work?
The main objective of a blockchain is to allow digital information to be stored, recorded, and then distributed, but not to be edited. By doing this, blockchains are essentially the foundation for transaction records that cannot be falsified, destroyed, or erased, and as a result, they are also known as distributed ledger technology. The concept of blockchains were first widely used in Bitcoin in 2009 and since then, its use has exponentially increased in the creation of various cryptocurrencies, decentralized finance applications, non-fungible tokens (NFTs), and smart contracts.

The transaction process of a blockchain and cryptocurrency is relatively straightforward. Once a new transaction is recorded into the blockchain database, it is then transmitted to a network of peer-to-peer computers across the world. From there, the network of computers solves different complex equations to confirm the validity of the transaction. After the transaction has been confirmed to be legitimate, it is then clustered together with other transactions into blocks. These blocks are then chained together, creating a long history of all transactions recorded, called a node. As a result, the transaction is complete and permanently entered into the blockchain’s database.


With the ongoing rise of cryptocurrency and other digital assets, blockchain has been able to make a significant name for itself outside of Bitcoin. It stands to make business and government operations more secure, efficient, accurate, and cheap with fewer complicated steps in between. In the future, blockchain will play a pivotal role in the growth of practical application of technology.

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