How Blockchain Works

Blockchain positions itself as a technology that can unlock a wide array of benefits across various industries and enterprise sectors.

Its ability to streamline operations, enhance efficiency, and reduce costs, while maintaining unparalleled levels of security makes it highly appreciated among savvy entrepreneurs and tech enthusiasts.

All of these advantages are made possible through blockchain’s ability to store transaction data, or any type of information that is considered valuable in a secure, tamper resilient environment, characterized by high levels of transparency and availability.

The name blockchain manages to illustrate through elegant simplicity how blockchain works from a storage perspective.

Data is stored in interdependent blocks to form a chain-like structure that continuously grows as new information is added. Each block records and validates the time and progression of transactions which are then added to the blockchain following a set of predetermined rules imposed by the network participants.

how blockchain works

Besides the validated timestamped information, each block contains a hash, a unique identifier that acts similar to a digital fingerprint, and the hash of the preceding block.

This ingenious design choice makes blockchain a highly tamper-resistant environment for the data stored within the system because the previous block hash locks the new block in the chain, preventing any modifications to the block, as well as blocking any attempts of inserting a new block between two existing blocks.

Due to this state of interdependence between blocks, even if a malicious actor manages to modify a block of transactions, any subsequent blocks will be rendered invalid, as the hashes will no longer match.

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