Blockchain 101

A blockchain is essentially a system for storing and securing information. It was originally developed back in 1991 by researchers to timestamp digital information and to protect said information from tampering and backdating.

In a sense, a blockchain can be thought of like the internet version of a notary. Once information has been added into the blockchain, it is practically impossible to manipulate it. This technology was largely ignored, however, until around 2009 when Bitcoin’s creator, Satoshi Nakamoto, used it to create Bitcoin.

Today, blockchains are one of the most common concepts in the cryptocurrency community, but only a few people actually understand how they work. If you are looking for this information then here’s what you need to know.

Understanding Bitcoin

Today, a blockchain could best be described as an open-source digital ledger. To put it another way, it is an online record that is open to anyone who wants to join.

When data is recorded inside a blockchain, it is practically impossible to change it, and this is because the data has been verified through a decentralized network. To understand how this process works, imagine one
of the blocks in the blockchain. Each blockchain block contains three essential components:

– Data
– The Hash
– The Hash of the Previous Block

Here are their roles.


The data that’s stored in a particular block is determined by its blockchain. Bitcoin blockchains, for example, store transaction details, such as the sender, the recipient and the amount of Bitcoin involved in the transaction.

The Hash

Whenever a new block is added in a blockchain, it gets a hash. A hash is essentially a digital fingerprint. and its role is to identify the block and all of its contents. It’s also completely unique.

However, hashes are not static. When a block’s data changes, its hash will change as well. In other words, whenever a block’s hash changes, it too will change, since they are interconnected.

The Hash of the Previous Block

Finally, we have the hash of previous blocks, and they are the reason why blockchains are so secure. For example, let’s say that you have the following blockchain:

Block 1 – Hash: A1, Previous Hash: 00
Block 2 – Hash: A2, Previous Hash: A1
Block 3 – Hash: A3, Previous Hash: A2

Now, let’s say that someone decides to tamper with Block 2. Due to the tampering, Block 2’s hash changes from A2 to X6. However, because Block 3 has a record of Block 2’s original hash, it will render the Block 2’s new hash invalid. If even a single block on the blockchain becomes invalid then all the rest of the succeeding blocks are rendered invalid.

Additional Security

Aside from the hash system, blockchains also use ‘proof of work.’ This mechanism slows down the creation of new blocks, which in turn further prevents tampering. This is because if a person wants to tamper with a particular block, they will first need to calculate the proof of work for all the succeeding blocks. This makes it very impractical to tamper with hashes, which in turn effectively adds another layer of security into the blockchain system.


Aside from hashing and proof of work, blockchains have one last security feature, and this is the most important one: Decentralization. Blockchains are not stored in a central server somewhere. They are distributed across various users on the internet.

What this means is that in order to tamper with a blockchain, it’s not enough to modify each block’s hash and proof of work. Every user-node in the blockchain must also be tampered with otherwise, the whole thing is pointless.

The decentralized nature of blockchains, coupled with their hash and proof work features, is what makes cryptocurrencies very secure.


How does a blockchain work – Simply Explained [Video file]. (2017, November 13).

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Written by dale

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