Today, Blockchains are widely known for their crucial role in cryptocurrency systems, if you’re on CT (Crypto Twitter), you must hear every day about Web3 and how the mass adoption of blockchain is gonna revolutionize our world.

This post demystifies what blockchain technology is, and how is it a secure and decentralized record of transactions. This is your ‘intro to blockchain technology. A complete, easy-to-understand, step-by-step beginners blockchain breakdown.

You’ll walk away knowing what blockchain is and why it matters, and how blockchain works.

A blockchain is a distributed database, shared among the nodes of a computer network. As a database, it stores information electronically in digital format. The innovation with a blockchain has made a world possible that guarantees the fidelity and security of data records and generates trust without having to worry about a third party taking it away.

The key difference between a typical database and a blockchain is the data’s structure. A blockchain collects information and holds sets of information together in groups, known as blocks. For example, blocks on the Bitcoin blockchain consist of an average of 500+ Bitcoin transactions. Blocks have a certain storage capacity and, when filled, are closed and get linked to the previously filled block, forming a chain of data known as the blockchain. All new following information is compiled into a newly formed block and forms a chain of transactions, thus the name, blockchain.

Immutable and distributed are two of the most fundamental properties of the blockchain. The immutability of the ledger translates to its accuracy, you can always trust it. And, being distributed protects the blockchain from network attacks.

Can you imagine a company owning a server farm with 10,000 computers to maintain a database that holds all of its client’s account information? This company’s warehouse building contains each of these computers’ information and all of these computer’s control under one roof. This provides a single point of failure. If the electricity at this location goes out, what happens? If its Internet connection is corrupted, what happens? What if it burns to the ground? In any case, the data will be lost.

A blockchain allows the database’s data to be spread out among different network nodes at various locations. This creates redundancy but also maintains the fidelity of the data – if somebody tries to edit a record at one instance of the database, the other nodes would not be altered and thus would prevent a bad actor from doing so. If one user tampers with Bitcoin’s record of transactions, all other nodes would cross-reference each other and simply pinpoint the node with the incorrect information. This system aids in the establishment of a precise and visible sequence of occurrences. In this manner, no single node in the network may change the data it contains.

As a result, information and history (such as cryptocurrency transactions) are irreversible. A blockchain can store a range of information, including legal contracts, state identifications, and a company’s goods inventory, in addition to a list of transactions (such as with a cryptocurrency).

Users and developers can use a blockchain platform to build new uses for existing blockchain infrastructure. Ethereum, for example, has a native cryptocurrency called ether (ETH). However, the Ethereum blockchain also enables for the construction of smart contracts, programmable tokens, and non-fungible tokens, which are utilized in initial coin offerings (ICOs) (NFTs). All of this is implemented on top of the Ethereum architecture and is protected by Ethereum nodes.

Every day, the number of active blockchains grows at an exponential rate. There are about 10,000 active cryptocurrencies built on blockchain as of 2022, with hundreds more non-cryptocurrency blockchains.

A public blockchain, also known as an open or permissionless blockchain, is one in which anybody can join and construct a node without restriction. These blockchains must be safeguarded using encryption and a consensus technique like proof of work due to their open nature (Pow).

A private or permissioned blockchain, on the other hand, necessitates the approval of each node prior to joining. Because nodes are presumed to be trustworthy, the security layers do not need to be as strong.

Stuart Haber and W. Scott Stornetta, two mathematicians, proposed blockchain technology in 1991 as a way to ensure that document timestamps could not be tampered with. Nick Szabo, a cypherpunk, advocated utilizing a blockchain to secure a digital payment system known as bit gold in the late 1990s (which was never implemented).

Blockchain is finally gaining a reputation for itself, thanks in no small part to bitcoin and cryptocurrencies, with many practical uses for the technology already being implemented and researched. Blockchain, which has become a buzzword on the lips of every investor in the country, promises to make corporate and government operations more precise, efficient, secure, and cost-effective by eliminating middlemen.

As we approach the third decade of blockchain, the question is no longer whether older organizations will adopt the technology, but rather when. Today, we are seeing a rise in NFTs and asset tokenization. The next few decades will be a critical phase for blockchain development.