Lesson 2: How Does a Blockchain Work?

The blockchain is a database that allows you to add information but not edit it, therefore making it the go-to place for accurate information.

In the digital world we live in, it’s very easy to manipulate information. In fact, it’s becoming harder and harder to know what’s true and whom to trust. This is where blockchains come in.

A blockchain is essentially a database that allows information to be recorded in it, shared, and made accessible to everyone but not make the information editable. This means once the information is in the blockchain, it cannot be changed or misconstrued or removed. In this way, the blockchain acts like a source of truth.

To understand how a blockchain works, let’s imagine you’re moving houses and you start by packing up your kitchenware.

You get all your special chinaware organized. You pack them into a box until the box is full. Once at capacity, you write “fragile: wedding chinaware” on your box. When the box is closed off, taped and labelled, you add it to your U-Haul truck and drive to your new home.

Well done, you’ve just enacted how a blockchain works!

In our example above, the brand new chinaware were your "transactions" made with bitcoin; the box itself labelled "fragile: wedding chinaware" was the "block" that contains all the bitcoin transactions (or chinaware); and the U-Haul truck was the blockchain that contains all the blocks full of transactions.

Just like the chinaware cannot be accessed from the boxes once the truck is driving to your new home, the transactions cannot be reversed, edited, or deleted once they have been added to the blockchain.

Does the blockchain only apply to cryptocurrencies, like bitcoin? Not necessarily.

How a blockchain works in different industries:

Health care. Medical records are being added to the blockchain so that practitioners can view accurate healthcare records in real-time.

Music industry. Songwriters are putting their creative work on the blockchain so that true ownership of work is recorded and other artists don’t plagiarize their work.

Space industry. NASA is using the blockchain to keep the information about their shuttles accurate, and as a way to protect their information from being hacked.

As you can see, the blockchain technology is spreading outside of cryptocurrencies and helping us create a world that is safer, transparent and more secure. It is being applied in areas where there is a lot at stake and where information should not be tampered with. This is why the blockchain is powerful.

Academy

More Beginner Lessons

What are cryptocurrencies?

What is bitcoin? Why bitcoin?