How does the blockchain work? Here is all you need to know

How does the blockchain work? Here is all you need to know.

Bildkälla: Trijo News

The blockchain is the invention that bitcoin is built upon. But how does it work exactly? Trijo News explains all you need to know.


You’ve probably come across the word “blockchain” as it seems to be among the buzzwords of recent technological inventions.

Simply put, the blockchain refers to a time-stamped sequence of fixed record of data. This data is managed by a collection of computers that are not owned by any institution. The blocks of data are connected and chained to each other by the use of cryptographic principles.

To transfer money

To further elaborate on this explanation, imagine your friend wants to transfer money from his account to your account. He will then have to reach out to the bank and request them to do the transfer.

Once the money has been transferred from your friend’s account to your account, the two banks will have to keep an entry of the transactions in their register.

The only problem with these entries is that they can be easily manipulated or changed. This is the same reason why some people are trying to avoid the banks. For such people, the blockchain comes in handy.

How does the blockchain work?

To better understand how the blockchain works, let’s picture a Microsoft Excel or a Google spreadsheet that is duplicated and shared across different networks of computers. This network is designed in such a way that it updates the spreadsheet and shares the information with everyone. Anyone on the internet can access this data, but none of them can edit it.

Since the blockchain database is not kept in one single location, its records are public and can be verified easily. This means that there is no centralized form of this information that a hacker can corrupt.

While a spreadsheet has rows and columns, the blockchain works with blocks, which is a series of data. This data is added to other blocks in the blockchain in chronological order, creating a series of blocks connected together. The first block in this chain is referred to as the Genesis block.

The process of how the blocks are created

Stage one

A node (a point, or a computer, in the network) or miner (a computer that secures the network and processes transactions) starts a transaction by creating and digitally signing it using a private encryption key.

In a blockchain, a transaction can be different actions, although the most common one is the exchange of value across users on the blockchain matrix. This transaction usually consists of some kind of proof of transfer of value, origin and destination addresses, relevant rules, and any other validation information.

Stage two

The transaction is publicized (flooded) using a flooding concord also known as the gossip protocol. The peers will validate this transaction based on predetermined criteria. As a rule, more than one miner is required to confirm the transaction.

Stage three

After validation, the transaction is incorporated in a block and then spread onto the network.

Stage four

The newly-generated block is now part of the ledger. The next block will cryptographically link itself to this block.

At this point, the transaction will get its second confirmation, as the block gets its very first verification.

Stage five

Transactions keep being reconfirmed whenever a new block is generated. Usually, six validations are required to consider a transaction final.

To conclude

There you have it – the simplest explanation of how the process of moving money in the blockchain works.

It may seem complicated for the first time, but don’t let that prevent you from reaping the benefits that come with the blockchain technology.

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