What Is Blockchain?
Blockchain technology is transforming how we record and secure digital information. This simple guide explains clearly what blockchain is, how it works, and why it matters to you.
What Exactly is Blockchain?
Blockchain is like a secure digital ledger shared across many computers. Each page (called a "block") records transactions or information. Once added, the information can't be changed or deleted, making the blockchain trustworthy and transparent.
How Blockchain Works (Simplified)
Here’s how blockchain transactions happen:
Transaction Started: A user initiates a transaction (like sending money or verifying ownership).
Transaction Recorded: Information is grouped into a "block" with details like time and amounts.
Network Verification: Multiple computers (called nodes) verify that the transaction is valid.
Block Added: Once confirmed, the block is securely linked to the previous block, creating a "chain."
Transaction Finalised: The transaction is permanent and visible to everyone on the network.
Because each block connects securely to the previous one, altering information becomes virtually impossible.
What Are Gas Fees?
Gas fees are small costs users pay to have their transactions processed on a blockchain network. These fees cover the computing power required to verify transactions. Fees can rise when the network is busy and decrease when it's less active.
Understanding Consensus Mechanisms
Blockchain doesn't rely on banks or other authorities. Instead, it uses consensus methods—rules to verify transactions. The two main types are:
Proof of Work (PoW): Users (miners) solve complex puzzles to verify transactions. It's secure but uses lots of energy (e.g., Bitcoin).
Proof of Stake (PoS): Users (validators) confirm transactions based on how much cryptocurrency they hold or "stake." It's faster and uses less energy (e.g., Ethereum, Cardano).
Blockchain and Web3 Blockchain is crucial for Web3, the next stage of the internet. It helps create secure, decentralised services where users control their data, digital identities, and online assets without needing middlemen like big companies or banks.
Summary
Blockchain technology provides a safe and open way to manage digital information and transactions. Its ability to offer security, transparency, and user control makes it increasingly important for our digital future.