Blockchain/Web3 101 | What is a blockchain?

A blockchain is a decentralized, distributed ledger technology (DLT) that records transactions across many computers in a way that ensures the security, transparency, and immutability of the data.

How it works

1. Transaction Initiation: A user initiates a transaction, such as sending cryptocurrency to another person.

2. Broadcast to Network: The transaction is broadcast to the network of nodes.

3. Validation: The nodes on the network validate the transaction using the consensus mechanism (commonly Proof of Stake or Proof of Work)

4. Block Creation: Once validated, the transaction is bundled with others into a block. The block is assigned a unique hash and is linked to the previous block in the chain via the previous block’s hash.

5. Block Addition: The block is added to the blockchain, becoming part of the permanent record.

6. Finalization: The transaction is considered complete and confirmed. It is now recorded permanently in the blockchain.

Characteristics of Blockchain

• Decentralization: Unlike traditional databases that are controlled by a central authority, a blockchain is distributed across many participants (nodes) globally.

• Transparency: Since the blockchain is public, anyone can view the transactions that have occurred. This promotes accountability and trust.

• Security: Blockchain is secure by design. Its use of cryptographic techniques (like hashing) ensures that data is nearly impossible to alter.

• Immutability: Once a transaction is recorded in the blockchain, it cannot be altered or deleted without consensus from the majority of the network.

• Consensus Mechanisms: Blockchain relies on participants (nodes) agreeing on the validity of transactions.