Hello Readers,

Today, we are going to dive deeper into the Blockchain Ocean. Wondering about it!
Don’t worry. I’ll explain to you everything related to blockchain in an easy and simple way so that you’ll always remember it. When you start your journey in cryptocurrency, then the first thing always comes in the path is Bitcoin and Blockchain.


Do you really know about them and how blockchain functions?
If NO, then you are at the right place.

I’ll make you understand it more easily and deeply. So, fasten your belts and let’s begin with the journey “Inside Blockchain.”

The story starts from a misconception.

Many people are not really well acknowledged about Cryptocurrencies and blockchain. Usually they only know about Bitcoin. They think that Bitcoin and Blockchain are something common in reality. They mixed up both and consider them as a risky or Ponzi creation. Since, the reality is different.

“Bitcoin is a Digital Currency, Blockchain is a Technology”

See, how simple it was to differentiate both.

A Blockchain is like a software which runs on the internet. It is a chain of blocks which contains informational data. It was originally coined in 1991 where some group of developers had highlighted its name but still the story ended there. After 18 years again Blockchain came into limelight. Yes, it was introduced to the world again in a different way. The new Blockchain was introduced by “SATOSHI NAKAMOTO.”


There is a suspense still associated with it. Nobody knows who Satoshi Nakamoto is. Whether he is a person or an organization, no one knows. Strange! Isn’t it?

So, with Blockchain there was a new revolutionary Coin which was born in 2009. This virtual coin runs on Blockchain Technology. The coin was named ‘BITCOIN.’ As I explained above, both are different.

A Blockchain is a Decentralized Distributed Network in which no third party is involved. It is made for transferring money digitally with less transactional fees and high speed. Bitcoin is a software with no physical presence or appearance. It runs on Bitcoin Blockchain and can be traded by exchanging from each other. (Buying/Selling)

There are three types of Network system that can be seen below to understand the difference between Centralized, Decentralized and Distributed systems.

1.      A centralized network collects data from the users and keeps it hidden from the people which makes it accessible to the single owner of the network.

2.      A Decentralized network collects data from the users but eventually keeps its copy on several other similar networks which eliminates the risk of single network failure. This helps to get the lost information instantly as the copy of data is available on every similar network.

3.      A Distributed Network is what a Blockchain works on. It is transparent and anyone can see the information available on the Distributed Ledger. The data will show the transaction details by keeping the anonymity of the user. This makes it more secure and transparent. Each and every transaction is recorded and noted in the Blockchain.

Let’s see what role a Block has in a Blockchain.

Each block in a blockchain contains some information in the form of Data, Hash and Hash of previous blocks.

DATA – The information which is stored in bytes format is known as a DATA.

HASH – A Hash identifies data of the Block. It is like a digital signature with a large number written in Hexadecimal format. Bitcoin uses SHA-253 Hash Algorithm.

Hash Of The Previous Block – The hash which has been carry forwarded from the previous block is called ‘Hash Of The Previous Block.’

Now, the terms are clear to you. Right!
So, we’ll understand how a block functions in a Blockchain. I’m explaining it to you with a picture provided below.

In this picture,

This is Figure A. Here, you can see there are 3 blocks. There are 3 Green and 3 Red stickman icons. The GREEN indicates a ‘HASH’ and RED indicates ‘Hash Of Previous Block.’  The YELLOW arrows denote the transfer of information in form of DATA.

·        When a Data enters in a block, it verifies it and creates a ‘HASH’ which will be used to verify the authenticity in the next block.

·        The Hash will be carried forward in the next block.

·        Then the next block will verify it.

·        The process is continuous and interlocked with each block.

·        This creates a Chain of Blocks.

Now, we’ll see what happens when someone tries to Tamper or change the algorithm of block with a bad intention. Observe the below given picture and understand the concept.

In this picture,

This is Figure B. Here, you can see there are 3 blocks.

·        When a Data enters in Block 1, the Hash is created.

·        Since, there is a problem in block 2.

·        A tampering or change is detected.

·        When such things happen, the Hash changes and is not matched/verified by the next block’s Hash.

·        This creates a blockage in transmission of data and the transaction is not verified.

·        This makes Blockchain more secure and safer as compared to centralized networks.


When it comes to security, Blockchain provides first-hand support to the users. Once a data is recorded in the Blockchain then it is very difficult or almost impossible to change or alter it. Blockchain had made the Decentralized Consensus possible. The blocks created in the blockchain are calculated more rapidly by the computers which increases the speed and efficiency of the transactions.

Image Courtesy -

When we talk about transparency, Blockchain is fully transparent. When someone joins the network and creates a Block, then the block is sent to everyone on the network. Each block is verified and checked properly. Anyone can check their or other’s transactions on the Blockchain but can’t know who sent it or received it by name because there will be only Hash and sender/receiver’s address written in the alphanumeric format. This network system is known as Distributed Network System and the records are saved in Open Public Ledgers which are accessible by everyone.

Role of Miners

Once you understand about the functioning of Blockchain, the further topic will become very interesting and fun loving.

A miner is a person who uses his computational power to solve a computational problem which allows them to form a new block of transactions after successfully validating it.

A miner gets reward in form of “Block reward” and “Transaction Fee” only if he solves the problem before other miners and validates the transaction successfully. It’s not a challenging task because miners use High GPU Graphics and Hardware to make this thing easier. They do it on a large scale by opening a “Mining Farm.” This is just a brief explanation of miners. I’ll drop a link below for further study. The mining is done in two ways –

·        PROOF OF WORK


Since, I’d already made a full-length blog on ‘Proof Of Work’ and ‘Proof Of Stake,’ so it would be great if you read that too. I’ll provide the LINK at the bottom of the Blog. Before ending our blog, let’s envelope it by a quote.

“If you can’t explain it simply, you don’t understand enough” – Albert Einstein

I hope this Blog will make you aware and understand about Blockchain Technology more easily.

Thanks for reading.

Additional Links-


  1. Great Article Sumeet ! Should be one of top articles when someone searches Blockchain simplified

    1. Thanks Manish. This is one of the most recognizable comment. I appreciate it😀