How Blockchain Technology Works an Easy Guide for Beginners

Block chain is one of the biggest buzzwords in technology right now. But what is it? And why are all your people around you talking about it?

Let’s start from the beginning. The first major application of block chain technology was bit coin which was released in 2009. Bit coin is a crypto currency and the block chain is the technology that underpins it. A crypto currency refers to a digital coin that runs on a block chain.

Understanding how the block chain works with bit coin will allow us to see how the technology can be transferred to many other real-world use cases.

Bit coin is the brainchild of a mysterious person or group of people known as Satoshi Nakamoto. No one knows the identity of Nakamoto, but their vision was laid out in a 2009 whitepaper called “Bitcoin: A Peer-to-Peer Electronic Cash System.”

With the help of block chain, many people can write entries into a record of information, and a community of users can control how the record of information is amended and updated. Wikipedia entries are not the product of a single person. No one person controls the information. Anyone can write and edit Wikipedia information.

Where Is the Block Chain Stored?

Anyone can view the contents of the block chain, but users can also opt to connect their computers to the block chain network. In doing so, their computer receives a copy of the block chain that is updated automatically whenever a new block is added, sort of like a Facebook News , twitter news Feed that live updates whenever a new status is posted.

Each computer in the block chain network has its own copy of the block chain, which means that there are thousands, or in the case of Bit coin, millions of copies of the same block chain. Although each copy of the block chain is identical, spreading that information across a network of computers makes the information more difficult to manipulate.

With block chain, there isn’t a single, definitive account of events that can be manipulated. Instead, a hacker would need to manipulate every copy of the block chain on the network.

Looking over the Bit coin block chain, however, you will notice that you do not have access to identifying information about the users making transactions. Although transactions on block chain are not completely anonymous, personal information about users is limited to their digital signature, or username.

Block chain works on three algorithms as listed:

1) Private Key cryptography
2) Distributed network with a shared ledger
3) Incentivized service for the network’s transactions, record-keeping and security.

The main purpose of Block chain is to create the secure and decentralized network and allows value exchange without any central authority or trust. The most discussed and used technology created using block chain is Bit coin.

Bit coin is a digital currency which has no value to itself but gains value as we agree to trade using them. To be able to perform the transactions in the block chain you need a wallet, which allows you to exchange or transfer the bit coins. The technology has crowded internet like anything with the increased rate of bit coin usage.

Why Block Chain Technology ?

The traditional way of sending information is to first send the documents to them and then wait for them to review it before the final approval and its take long time. This is a wastage of time as you need to wait for that person to review as it takes time in whole revision and you are even locked out as the other person is reviewing the document right now.

This is how a transfer of funds happens as they lock window for short duration to complete the transaction. Hence, block chain technology is distributed and immense as the documents remain shared is visible to all viewing that information.


• It is like the internet with inbuilt robustness.
• The technology is not controlled by any single person.
• The block chain is durable with the information that is transferred.
• This technology has no failure point.
• Transparency in the document flow between the parties.
• No missed data or information and record of every single transaction make it robust and reliable.
• It has a self-auditing environment.
• Each group making transactions are known as groups, where the transaction has done cannot be corrupted and it is safe.
• Solves the problem of manipulation.

The Block chain technology is durable and robust which maintains the data integrity and authentication with no point of failure.

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