Blockchain Simplified

So what is blockchain?

In simple words it is a “chain of blocks” where each block will have 3 properties, the data, hash of the data in the block and hash of its previous block. The first block is called genesis block and it does not contain hash of previous block.

The entire system is decentralised, you can think of a distributed ledger, which means it is open to anyone. It is a peer to peer, and each user/node on the network gets full chain.

When someone creates a new block, it is sent to everyone and each node verifies for its validity and if found valid, it adds to the chain. The process of verifying is yet another topic. To tamper with this process you need to tamper with all blocks in the chain and redo the “proof of work” for each block and take control of 50% of network. This is highly impossible and will need enormous amount of computing power running into millions of dollars. On top of it, blockchain is continuously evolving, nowadays they use “smart contract” which is an additional process to secure the system.

Now you might think that nowadays we have computing power to change 100’s and 1000’s of hashes per second. This is where “proof of work” kicks in, it slows down hashing, in bitcoin it is 10 mins. It is said that to generate all 21 million bitcoins possible by the algorithm, it will take another 100 years or more.