What is Blockchains Technology? A Comprehensive Guide

What is blockchains technology? This is a question that many people are asking, and for a good reason. The blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. It can revolutionize the way we do business and could even change how our society functions. This comprehensive guide will explore what blockchains technology is, how it works, and some of its potential applications.

blockchains technology

Blockchain is a chain of linked blocks that use cryptography. It’s a kind of database that’s spread out. Unique to the blockchain is that no one else can change its information.

What Exactly is Blockchains Technology?

To get a basic idea of how the technology works, let’s look at why they call it “blockchain” first. The name “chain of blocks” means that. Each block is a piece of digital information stored in the public database (ledger).

Things a person who isn’t very well-versed in blockchain should know

7 Must-Knows for Beginners

People who aren’t very well-versed in blockchains technology should learn some things.

  • Each block is a record of some transactions made in the network in a chain. They include the amount sent, the date and time, and the digital signatures of the people who took part in the transaction.
  • A lot of things happen “peer-to-peer.” Banks or agents are not used by the people who participate in the game. As a result, they save a lot of money on the services of people they trust. The system itself makes people trust it because of how it is built.
  • Blockchain is a shared ledger that is stored and updated on many computers simultaneously. Unlike a traditional database run by one person, there is no one person in charge of it.
  • As there is no single person who runs and controls a blockchain network, it needs “miners.” Transactions are checked and confirmed by them. Every time you make a transaction, it has to be reviewed by miners. Then it is part of the blockchain.
  • Everything is recorded and stored in an encrypted form. Each block has a unique code (hash) that stands out from the rest. A string of random characters is what these codes look like. They also have the same length.
  • Cryptography links each block in the chain to the one before it. Thus, it’s impossible to change anything in one block without affecting a lot of other blocks.
  • In the same way, the blockchain is both private and open at once. It is possible to see all the transactions, but you can’t connect them to real people.

These were the main things to keep in mind. Keep going, even if they don’t make sense to you right now. These things will be discussed much more when we talk about them later on.

Then, we’ll show you how the blockchain works for people who don’t know much about it yet.

blockchains technology

What Exactly Is Blockchain, and How Does It Work?

Let’s see how the blockchain works step by step.

Imagine that you want to send your friend X 1 BTC, but you don’t know how to do it.

  • Step 1 – You want to make a deal. We’re going to use digital money in this example, but it could be anything that has value.
  • Step 2 – You make the deal public. In this case, each computer in the network is made aware of the new thing.
  • Step 3 – The nodes use the established algorithm to check the transaction. They need to make sure that you have 1 BTC that you will send to your friend X and that this money doesn’t get used for anything else (double-spending).
  • Step 4 – When all the nodes agree that your transaction is correct, it moves into a new block and becomes a permanent and immutable part of the distributed ledger. A mistake can’t be changed at this point. Even if you realize it was a mistake, you can’t do anything about it.

This helps us understand how it works. To do this, we need to talk about the basics of the blockchain first.

blockchains technology


It is natural for blockchain networks to be decentralized because no one owns them. To help you understand what it means, we’ll compare them to the systems you’re used to.

Somebody in charge of records makes stores and updates them in a centralized system. This is a straightforward idea. Among other things, your bank is to store your financial information and has control over it. People who work for banks sometimes share your information with the government or give it to their business partners. Theoretically, they could change this data, delete it, make it hard for you to get to it, or lose it to hackers.

In a decentralized blockchain-based system, your data doesn’t stay in one place, and no one owns it, so no one can see or change it. All the people on the network have these records stored in the same place on their computers, so in a sense, it is theirs. As there isn’t a single person in charge of the process, the peers talk to each other independently. People A and B don’t need to use banks or payment systems to send and receive money, grant ownership rights, or make other agreements. They don’t need law offices either.

The history of all network transactions is available to anyone looking at it. Everybody can see it at any time, but no one can change or delete it. It’s the “single source of truth.” It would be tough to break into because a blockchain network is spread out. You can make changes to a central database without anyone noticing. But it’s impossible to do when there are a lot of different computers that have the same data on them.


They say that blockchain is a good thing because it is “open.” At the same time, many people think Bitcoin is a great way to pay for illegal stuff because it is so anonymous. Right: Who’s right?

It doesn’t matter what you think about blockchain: it allows transparency and privacy.

We’ll use a real-life example to show how it works when we talk about it.

X is getting 1 BTC from you again.

In this case, you send a message to the network, and every node in the network hears it. They check and double-check to make sure it’s true. In the next block, they add it. All people on the web can see this chain of events happen in real-time. This is what we mean when we say that the blockchain is “transparent,” This is what we mean.


Okay, so what do we mean when we say that the blockchain is “private” when we say that?

Transaction records don’t get linked to the real identities of people who send and receive money. If you write “Alice sent Xavier 1 BTC,” the people who see it won’t read it. Instead of their names, they will see a long string of random characters (your public address), the time, and the amount you sent them, instead.

Thus, the blockchain kills two birds with one stone. People may see the transactions made by a specific public address, but they don’t know who is behind it.

In the case of Bitcoin, your public address and IP can be used to find out who you are. People call it “pseudo-anonymous” because it’s not an anonymous person.

You can buy so-called “privacy coins” if you want to be completely anonymous when you buy things. Monero is the most well-known of them. It hides the names of both the sender and the recipient and the amount of money sent with the help of three different technologies.


Once you put something into the blockchain, you can’t take it back out. This is called “immutability.” None of this is going to change.

One of the main things that make blockchain better than systems is that you have to trust people who might not keep their promises. People can trust each other in a blockchain network because they use cryptography and math to keep things safe.

How Does It Work?

We already talked about hash, a unique number for each block. A cryptographic function is used to make a hash. It turns text of different lengths into a code string of a certain length.

An algorithm is used to run a text that includes the new block transaction data and the previous block’s hash in the chain through a set of rules and checks. The SHA-256 algorithm is used for Bitcoin. It doesn’t matter how long your text is. You always get a hash of 256 characters.

It’s impossible to change the data on the blockchain because Block 10 consistently links to Block 9. (includes its hash). Then, Block 8, and so on. If you want to make even the smallest change, you have to deal with a lot of data and spend a lot of money. Getting a trophy isn’t worth all the time, money, and energy it takes to get one.

blockchains technology


When it comes to the physical world, a blockchain network comprises a group of things called nodes. They are each a computer that is connected to another computer. You already know that there is no single server in a blockchain to run the database and keep it updated. This load is spread out among many peers. As soon as you join the community, you get the full version of the blockchain and start running a node on your machine.

A new block can be added to the blockchain when all the other nodes agree that it is safe. To figure out if this new block is good or bad, the nodes use consensus – a set of rules. The agreement makes it possible to agree on the value of new data that has been added.

It’s the main idea of the blockchain, which is a system where people work together. All the nodes are the same. They have the same rights, but their jobs may be different. Among other things, you can run the light or full version of the blockchain (light or full node), mine on the blockchain, or do other items on the blockchain.

Full And Light Nodes

You don’t download the whole blockchain if you run a lightweight (or light) node. You only download the block headers. People who use light nodes verify transactions and need full nodes to help them out.

Running a full node takes a certain amount of free computing power. Full nodes are used to ensure that transactions and blocks are 100% safe. They are essential for the whole blockchain network to work.

Mining usually means running a full node as well. A miner is a node that makes new blocks. Other nodes just check the information. Later in this article, we will discuss how to mine the blockchain.

As soon as we have the basics down pat, we’ll talk about how technology can be used.

Blockchain Is Used for What?

You use blockchain in a lot of significant ways. I have written them down for you.

Transfers of Money

Blockchain-based money transactions use a lot of different currencies. It’s the biggest and oldest one, but there are many more. Such transfers are very safe, very cheap, and very fast. They are also effortless to do.

Smart Contracts

Distributed ledger technology (DLT) makes it possible to make any agreement into a “smart contract” by putting it into code. When certain conditions are met, a specific thing happens by itself.


Blockchain can be used to check information about property ownership, rights, identities, and more. Important: Nobody can change or steal it. Find out who owns the house you want to buy or the music you use in your video. Find this information in the blockchain and get in touch with the person who made it.


When people and businesses talk to each other, share information and resources, raise and distribute money to fund projects, and work together, the Digital Ledger Technology (DLT) helps them do these things better.

blockchains technology

Who Uses Blockchain?

The most apparent use of blockchain is to make money. The current financial system isn’t perfect and needs to be changed. Money transfers across borders are awful because they are very costly to send and take a long time. In terms of price and speed, blockchain networks can’t be beaten.

Modern customer uses the Internet and apps on their phones. Smartphones and PCs are cheap enough for most of us to buy. Information moves very quickly. People don’t understand why banks take so long to transfer money from one account to another and why it costs so much. People say that Bitcoin and other cryptocurrencies are the most up-to-date way to deal with this thing.

From 2009 until now, the number of cryptocurrency wallets has been growing. On Sept. 30, 2019, it was over 42 million.

There you go: That’s good. More than 70% of BTC users are men, and most of them (58%) are between 18 and 34 years old. People buy crypto assets because they want to make money with them. In general, people don’t have a lot of faith in national governments or banks, and they also want to make more money at some point in the future. As you can see, both of these things are pretty common, as well.

Blockchains Technology and Cryptocurrencies

A lot of people use blockchain to make things like cryptocurrency. To see how this works, it would be interesting.

If you want to put it this way, “almost any cryptocurrency is an electronic cash system that doesn’t have a trusted third party.” In terms of “normal” money, what does it mean to have this money?

Digital vs. Fiat: The Basics

Traditional currencies are made by governments and are controlled by them. A government may decide to print more money if they need it. When you had fiat money, like the USD, it was backed first by gold and trust.

The supply of cryptocurrency is fixed. The nodes make sure that crypto transactions are confirmed. In this case, they agree on whether or not these transactions will become part of the blockchain. Mining is the process by which new coins are made. The time has come to think about it in more depth.

blockchains technology

Blockchain Mining

People who mine add blocks to the blockchain and make new coins, called mining. We will think about it by using the Bitcoin network as an example. It uses the PoS (Proof-of-Work) consensus method.

This is called “Proof of Work.” If a computer in the BTC network wants to add a new block to the chain, it has to show this so-called “Proof of Work.” With a cryptographic hash function, a math problem is solved that is linked to the new block data. You show that you have done this. This “work” is needed to allow the transactions to go through.

Such a puzzle is tough to solve. People didn’t even have a chance of finding the correct answer until February 2019. There are so many things that you need to do with your computer. It means spending a lot of money on powerful and expensive mining hardware and paying a lot of money for electricity, which is very expensive for mining. Imagine how many resources you would use if you tried to hack into many different blocks.

Is Mining Worth It?

Today, many people see mining as a way to make extra money. Even so, it isn’t as easy and profitable as it was a few years ago, though. Miners compete with each other to get new BTC or other coins that have been made. To win them, they have to keep their hardware up to date all the time. The more processing power you have, the more “guessing” attempts you can make per second.

It gets more challenging to work in the network (and to mine in it) over time as more and more blocks are added. Another thing that happens every 210,000 blocks is “Bitcoin halving.” This is when half of all the money you get for mining goes away. When the next halving comes around, it will be in May 2020.

In the end, solo mining isn’t worth it if you want to mine older cryptos like Bitcoin. It would be better to join a mining pool, where the reward is split between everyone who works. When this model is used for a long time, it gives you a more stable source of income

blockchains technology

Private and Public Key Encryption

People who want to understand how the blockchain works need to know about public and private keys.

Most cryptocurrency users don’t share their private keys with anyone, keeping them in a safe place. If someone knows your private key, they are now a co-owner of your money, too. You can share your public key with anyone you want. So, they are called public.

This is the best way to explain the difference between public and private keys. You can compare the first to your email address and the second to your password for your email. You give your email address to everyone you want to talk to. On your business card, print it. If you’re going to get feedback from a bigger group, you can share it on social media and other places. The reason it’s safe to share because your account is safe because you have a unique password.

What Is The Difference Between Public And Private Keys

If you don’t want to give this password to anyone else, don’t. This means that these people will be able to look at your messages and reply to them if you do. In this case, they can send you messages and delete the ones they don’t like. They can change the settings and preferences on your account and make changes to them.

People need to know your public key to send you money in a blockchain context. People who send, receive and own the thing need to keep their private keys safe. The public key encrypts messages, and the private key with the same name decrypts them.

There are public and private keys, and they both look like long strings of random characters.

blockchains technology

To sum up, your private key is proof that you have the right to own and manage digital funds. As soon as you lose control of it, you lose control of your cryptocurrency. Your public key may be available to everyone, just like your name and phone number.

How Blockchain Works Beyond Cryptocurrency

It isn’t just about cryptocurrency and the world of money when it comes to blockchain.

The technology could be suitable for many different industries, and there are three big reasons why.

  • It cuts out a lot of middlemen, which saves both money and time for everyone.
  • Replacement: A single source of correct and up-to-date information is better than many databases that don’t talk to each other and don’t always agree on what to do with each other.
  • Blockchain can speed up a lot of things. Every time we buy, sell, rent, start a business, move to a new place, or change jobs, we must fill out much paperwork. This reduces the amount of paperwork we do.

Below, we list some sectors and industries that we could change because of blockchain solutions.

Blockchains Technology

Peer-To-Peer Sharing Economy

The service could be similar to Uber, Airbnb, or eBay, but no one would be in charge. It used to be free, but now the web service charges you a lot of money for things like “matching,” confirming your identity, getting insurance, handling disputes, and so on. A blockchain system will allow you to sell, buy, rent, or share everything in a P2P way. To process your transaction, you will only have to pay a small fee for its infrastructure. A fixed percentage of the money in the deal is better than giving away a set amount.


In the beginning, blockchain was an accessible technology. However, it can also help the way central bodies work better, as it has been shown. Today, the biggest problems that governments face are a lack of trust from the public, issues with data security, inefficiency, and too much paperwork—people who work for the government charge a lot more than they should. People waste a lot of money because of outdated and complicated rules. When things don’t go as planned, that’s why.

Blockchain makes many things more accessible by cutting out a lot of paper, steps, and people who don’t need to be there. It might be the way to make people trust their governments again. All records are kept in an immutable distributed ledger that everyone can see, so there is no room for anyone to get them wrong.

On the other hand, blockchain technology can make people follow the rules and rules. For example, it stops businesses and people from falsifying important data or paying government inspectors to “fix” databases.

Supply Chains

The safety of supply chains is an important issue. It’s especially true in the healthcare field: we have to track the source of drugs to make sure they aren’t fake. A distributed ledger would let us keep track of all the information about products. We could see where they came from and how they got to the store from the factory. Easy: It would be simple to check the realness of food, drugs, cosmetics, cosmetics, diamonds, luxury bags, and other things. Because of this, we could be sure that labels like “organic” or “made by local farmers” are accurate.


A voting system based on the blockchain prevents election fraud in many countries. Transparency and the fact that it can’t be changed would help people trust the election process again, which would make them more likely to vote. So far, a lot of states have tried this new voting method. The first country was Sierra Leone.


Having a single “source of truth” that can be accessed by anyone who is authorized to do so from anywhere in the world makes healthcare a lot easier for doctors and patients to work with. There are now many databases owned by different medical institutions that don’t want to share this information. People also have trouble with fake or stolen drugs. It will cost the industry a lot of money and put people at risk. 30% of all drugs sold in Africa, Asia, and Latin America aren’t drugs at all!

What will happen to the records if we move all of our medical records to a blockchain network? When you see your doctor, they will have all of the information you need at hand. These tests won’t have to be done over again if you move from one doctor to another. Patients or doctors won’t change data to get more money from their insurance. Then there will be fewer people who are lying. Finally, patients will be able to control their medical information. Now hospitals and clinics own it, which means they can share, change, or sell it, and they can do that now, too.

Blockchains Technology

Property Records

In a single database, property titles can be faked. These records are made and checked by hand. As a result, they may have mistakes in them. These mistakes could be used by someone who wants to take your land or house from you. There are other ways for them to change records. They can “pull some strings.”

A distributed ledger could help us keep track of the names of our properties. It ensures that the information is safe and accurate, cuts down on paperwork, and helps settle property disputes. Georgia and Honduras have already tried out land records that use blockchain technology. So far, the results are promising.


The DTL can also be used in a lot of different fields. They include insurance, gaming and gambling, shopping, disaster management, environmental control, crowdfunding, charity, the art business, and so many other types of business. As more people use technology, the list will grow.

Common Blockchains Technology Questions and Answers

What is the simplest way to explain blockchain?

In this case, it is an internet-based ledger where transactions that have been verified are kept.

Why do they call it ‘ledger distributed’?

Because it is not a single database, but a network of computers, the most recent copy of the blockchain is sent to all the computers in the world, so they can all see it (nodes).

What are the main blockchain features?

Blockchain systems are always decentralized and transparent, and they can’t be changed or deleted by anyone. Everyone can see the history of the transactions that have been made, but no one can change it. There is no one in charge of it.

So, what is a node?

Any computer that is part of a blockchain can be used. A node can be complete (storing the whole blockchain) and light (keeping the uncomplete or light version). Running a full node is very important for the system to work.

What is Bitcoin mining?

It’s a process called mining in which transaction data is checked. If you think about this, it means that you have to solve complicated math problems. Then, a new block is made and added to the blockchain. The miner who did it gets the coins that were just released.

For a user, how does blockchain work?

You make a transaction in the network and share it with other people who use it. Miners check and validate it, and then it’s added to the next block and makes up a part of the blockchain. This is how it works. After it, it can’t be changed or canceled.

How does blockchain technology benefit you?

Peer-to-peer: Blockchain is a system in which people work together to make money. It encourages direct communication between users and cuts out middlemen. As a result, it speeds up many complicated processes, cuts down on the amount of paper, and saves a lot of money. It also makes it near-impossible to change the data.

Blockchain is used for what?

Cryptocurrency is the most common use. Most people think of Bitcoin when they hear this word.

Are there any other uses for it?

Blockchain can be used in many different areas, like healthcare, supply chains, voting, real estate, the environment, and more.

Leave a Comment