Blockchain For Beginners: What Is It and How Does It Work

You’ve probably heard about the terms “Blockchain” and “cryptocurrencies” on more than one occasion lately. Cryptocurrencies investments are on the rise and blockchain technology is helping many companies, but understanding their meaning can be difficult. For that reason, we have prepared a guide to understanding what does this technology consists how, how it works, the unknown advantages, and how it can revolutionize your company. And everything is explained in a very simple way.

The blockchain is defined as the set of state-of-the-art technologies that enable the management of information in a centralized and decentralized way. It was born with the objective of facilitating cryptocurrency transactions securely and anonymously, but it was soon seen to have many more applications. With the addition of Smart Contracts, its evolution skyrocketed, as it became the fundamental piece in the path of companies when adopting this technology. As its name suggests (blockchain), blockchain consists of a single-record network where all connected nodes have a copy. These blocks store information from the previous block and pass data to the next block through cryptographic techniques. The blockchain stands out because the information transmitted through this technology is passed and stored with extremely high levels of security thanks to its complex encryption system. The records made through this technology are immutable, which helps transparency. In addition, free alteration of data is prevented and privacy is ensured.

A node in Blockchain is a connection point, connected to other nodes to send and receive data. In this sense, nodes are computers with the same rules that share information from a blockchain. As mentioned above, each node keeps a copy of this information, synchronized with the others. A network with many nodes makes it possible to increase the security of the blockchain, since it allows multiple copies of the information to be kept.

To visualize the idea of blockchain, we have to imagine a ledger where all inflows and outflows of money are recorded. This ledger is formed by a chain of blocks, which contain information about a transaction on the network. As they are linked, they allow data transfers where there is no need for a third party to certify the information. Once the information is entered, the global transaction log shows the items that have been modified or deleted in an immutable way, with no possibility of deleting those records. To achieve an attack-proof and effective chain, it is divided into several phases:

Types of Blockchain