What is Blockchain? What is it Used For?

Discover what blockchain is and how it revolutionises digital transactions. Explore the fundamentals in this easy-to-understand guide
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Are you asking yourself, what is blockchain? Here is the in depth explainer in simple terms.

Imagine a chain of blocks, like a necklace made of interconnected beads. Each block in this chain contains information that needs to be kept secure. Now, instead of a physical necklace, think of this chain as a digital ledger (like an organised spreadsheet).

There’s no central server controlling it. Instead, the data is stored across many computers all at once.

How does it work?

When someone wants to make a transaction, like sending money or recording something important, it gets added to the blockchain.

But here’s the magic: Once it’s in there, it’s pretty much impossible to change. Why? Because all those computers (called nodes) work together to validate and secure the information.

More or less, all the computers have to agree that the change is legit. So anyone up to no good would have to break into every single computer to change the digital ledger. It’s hard to imagine how that could even happen.

In this way, it makes the blockchain a very secure place to store information. This is why people call it “immutable”.

When we say that a blockchain is immutable, it means that once data (such as transactions) is recorded on the blockchain, it becomes permanent and tamper-proof.

The history of transactions stored in a blockchain cannot be altered or changed after its creation. Immutability is one of the defining properties of a blockchain system.

Real-life examples

Cryptocurrency uses blockchain to keep track of who owns what.

Medical records can be stored safely on a blockchain, accessible only when needed. Identity documents like passports, driver’s licenses – can all be securely stored.

Food supply records can be kept that trace every step from farm to table. Voting using the blockchain is transparent and tamper-proof.

Art and NFTs can be recorded on the blockchain, which means that there is proof of ownership of that particular piece.

The birth of blockchain

How did it all begin? Back in 2008, an anonymous person (or group) named Satoshi Nakamoto introduced the concept of blockchain when they created Bitcoin, the first-ever cryptocurrency.

Bitcoin is often referred to as digital gold — except you can’t hold it in your hand. Instead, it lives on the internet.

Unlike traditional banks, where a central authority controls everything, blockchain is decentralised. No one single boss calls the shots.

In an ideal world, blockchain is a bridge that connects people, businesses, and even robots.

The future of blockchain

Global trust network

Here is where most people in the blockchain industry think it is going.

Imagine a world where trust isn’t just a handshake — it’s encoded in digital blocks. Blockchain will create a global trust network where you can verify anything… from the organic origins of your avocado to the authenticity of a rare Pokémon card.

No more shady deals or fake stuff!

Financial revolution

Banks? Who needs them! Blockchain is already revolutionising finance. Users can send money instantly, without middlemen gobbling up fees. This is expected to increase in adoption. In fact it is already being taxed.

Health records

Doctors and hospitals will securely access your health data. No more lost files!

Decentralised everything

Governments, voting, social media — everything will be decentralised. No more Big Brother watching. You’ll have a say in how things run. It’s like a digital utopia where power belongs to the people.

Remember, this isn’t sci-fi — it’s the future that is already being built.

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What are smart contracts?

Not all blockchains can run smart contracts, which are like a digital agreement. Ethereum, for example, is the rockstar of smart contracts.

Bitcoin, on the other hand, does not have smart contracts, but it is like a reliable old library — it’s great for storing transaction records.

Here’s how smart contracts work. Imagine you’re ordering pizza online. You want the pizza delivered, and the delivery person wants payment. Now, what if we had a magical digital helper — a smart contract — to handle this?

A smart contract is like a digital agreement. It lives on a blockchain. Just like a regular contract, a smart contract sets rules. But here’s the cool part: it automatically follows those rules without any human intervention.

So, you order pizza. The smart contract kicks in: “When pizza arrives, pay the delivery person.”

It happens automatically without the delivery person or the pizza eater doing anything.

Features of smart contracts


Imagine all your friends having a copy of the same contract. No one can secretly change it. Everyone’s on the same page!


This means the smart contract always behaves the same way. No surprises! If the pizza arrives, payment happens — every time.


Once a smart contract is set — it can’t be altered. No sneaky edits!


No middlemen! The smart contract runs itself. Pizza referee not required.


Before launching, you can tweak the rules. Want extra cheese? Customise away.


Everyone can see the contract on the blockchain. It’s like a public pizza menu!

NFTs and the blockchain

NFTs are digital assets representing unique items — like digital art. Smart contracts handle NFT ownership and verify authenticity.

If you are a creator of NFTs, when someone buys your NFT, the smart contract can be written so that when your art changes hands, the contract triggers a payment to you automatically, like a royalty every time it sells.

Conclusion: The future of the blockchain

Although blockchain technology is still in its adolescence, it has enormous potential for innovation and disruption. Blockchain technology can change how people interact with one another and the environment around them as it develops and scales.

And as cryptocurrency and other digital assets are more widely adopted, Blockchain will become part of the infrastructure of life.

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Frequently Asked Questions

Are Bitcoin and Ethereum blockchains?

Both Bitcoin and Ethereum use blockchain technology. Whereas Ethereum is a public blockchain used to support transactions in the Ethereum network, Bitcoin is a public blockchain used to support transactions in the Bitcoin network. Proof-of-work consensus procedures are used by both blockchains to approve transactions and tack on new blocks to the chain.

How can I use the blockchain and buy things with It?

You must first obtain certain digital assets, such as Bitcoin or Ethereum, before using the blockchain. These assets may be bought on cryptocurrency exchanges with fiat money or other digital assets. These assets can then be traded on exchanges for other digital assets or fiat money, or used to make purchases on websites that accept cryptocurrencies.

How is the blockchain secure?

The blockchain's decentralized structure and use of encryption to secure data on the ledger make it secure. Each block has a hash that connects it to the preceding block, forming an almost impenetrable chain of blocks. Furthermore, it is challenging for malicious parties to modify the ledger since the blockchain employs consensus methods to confirm transactions and add new blocks to the chain. The blockchain is a potential technology for applications like online voting because of its security features since security and transparency are crucial.

What are the advantages of the blockchain?

The transparency of the blockchain is one of its key benefits. All transactions are accessible to everyone with network access, and the ledger is open to the public.

This renders it incredibly safe and almost tamper-proof. Because the blockchain is decentralised, there is no single entity in charge of the network.

This means that it is extremely resistant to hacking and other types of online assaults. Also, compared to traditional banking systems, which can take days to execute transactions, the blockchain is incredibly efficient, processing transactions in a matter of seconds.

How Does the Blockchain Work?

The blockchain functions by adding new blocks to the chain and validating transactions via a consensus method.

Participants in a proof-of-work consensus mechanism figure out challenging mathematical puzzles to approve transactions and add new blocks to the chain.

Participants in a proof-of-stake consensus method stake their digital assets to verify transactions and add new blocks to the chain.

What are different types of blockchains?

Private Blockchains: Contrarily, only a small number of users may access private blockchains, and a central authority manages the consensus mechanism.

Due to this, private blockchains are less decentralised than public ones, but they can still be very efficient and safe. Private blockchains are frequently utilised for business applications where data security and privacy are top priorities.

Compared to public blockchains, private blockchains provide several benefits. The confidentiality and privacy of your data are key benefits. The information on the network can be kept private and safe since only a small number of users have access to private blockchains. Due to this, private blockchains are perfect for business applications where data confidentiality and privacy are crucial.

In contrast to typical banking systems, which might take days to execute transactions, private blockchains can be extremely efficient, processing transactions in real time.

What are hybrid Blockchains?

By enabling both public and private network membership, hybrid blockchains incorporate the greatest features of both types of networks. Because of this, hybrid blockchains are quite flexible and may be used for a variety of purposes.

For instance, a hybrid blockchain might be utilised to build an open, safe, and accessible supply chain network while also protecting participant privacy and security.

What are advantages of hybrid blockchains?

The benefits of both public and private blockchains are offered by hybrid blockchains.

They are quite versatile and may be adapted to a broad range of applications since they allow for both public and private involvement in the network. Decentralised banking applications, safe and transparent supply chain networks, and other things can all be made with hybrid blockchains.

How are blockchains created?

Mining is a procedure used to generate blockchains that entails resolving challenging mathematical puzzles to validate and record transactions on the ledger.

Because of the high computational and energy requirements, there have been questions raised regarding how mining for blockchains would affect the environment. As an alternative, some blockchains employ the proof of stake consensus process, which requires that users stake their digital assets to confirm network transactions.

What are some examples of popular blockchains?

Among the most well-known blockchains are Bitcoin and Ethereum, but there are many more with a variety of applications and use cases.

Solana, Polkadot, Binance Smart Chain, and Cardano are a few examples. Although the consensus algorithms, governance models, and applications of these blockchains vary, they all share the fundamental characteristics of blockchain technology.

How are institutions using blockchain?

Several organisations are looking to use the blockchain for a range of purposes, such as automatic sales tax payment, tax collection, ID verification, international payments to get around sluggish and costly SWIFT, and more.

What is Blockchain Technology?

Blockchain is a shared, immutable ledger used for recording transactions, tracking assets, and building trust in a business network.

It can handle both tangible assets (like houses, cars, and cash) and intangible assets (such as intellectual property, patents, copyrights, and branding).

Essentially, anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

Why is Blockchain Important for Financial Services?

Business relies on information, and blockchain provides immediate, shared, and transparent information stored on an immutable ledger.

In financial services, blockchain can track orders, payments, accounts, and more, giving participants a single view of the truth.

It enhances confidence, efficiency, and opportunities by eliminating duplication of effort and ensuring data integrity.

What Is Computational Power in Blockchain?

Computational power refers to the processing capacity required to validate and secure transactions on a blockchain network.

Miners or validators use computational power to solve complex mathematical puzzles, ensuring the accuracy and security of the blockchain.

What Is the Bitcoin Blockchain?

The Bitcoin blockchain is the underlying technology behind the cryptocurrency Bitcoin.

It is a public, decentralized ledger that records all Bitcoin transactions in chronological order.

Miners validate and add new transactions to the blockchain by solving cryptographic puzzles.

What Is Digital Currency in the Context of Blockchain?

Digital currency refers to electronic or digital forms of currency, including cryptocurrencies like Bitcoin. These currencies exist purely in digital form and are not physical like traditional coins or banknotes.

What Is a Permissioned Blockchain?

A permissioned blockchain restricts access to certain participants who have permission to join the network.

Unlike public blockchains, where anyone can participate, permissioned blockchains are controlled and governed by specific entities.

How Does Blockchain Solve Business Problems?

A blockchain solution can streamline processes, enhance transparency, and reduce costs.

By providing an immutable record of transactions, it ensures trust and accountability in various industries, including supply chain management.

What Is Distributed Ledger Technology (DLT)?

Distributed ledger technology (DLT) is the broader category that includes blockchain.

DLT refers to any system where data is stored across multiple locations or nodes, ensuring redundancy and security.

What Are Public Blockchain Networks?

Public blockchain networks are open to anyone and allow anyone to participate, validate transactions, and maintain the ledger. Examples include the Bitcoin and Ethereum networks.

How Does Blockchain Impact Supply Chain Management?

Blockchain enhances supply chain management by providing real-time visibility, traceability, and authenticity. It helps track products from origin to destination, prevents fraud, and ensures compliance with regulations.


Blockchain: A decentralised and distributed digital ledger that records transactions across a network of computers. Each block in the chain contains several transactions and is connected to the previous block, forming a chain of blocks.

Decentralised: A system or network where there is no central authority or middleman in control. Instead, the control and decision-making power is spread out among the participants.

Distributed: A system or network where data is stored and processed across multiple nodes or computers, rather than in a single centralised location.

Ledger: A record of transactions or other data that is maintained and updated by a network of computers.

Public blockchain: A blockchain where anyone can participate in the consensus process and view the transactions on the network. Public blockchains are highly transparent and decentralised.

Private blockchain: A blockchain where only a select group of users can participate in the consensus process and view the transactions on the network. Private blockchains are less decentralised but offer more privacy and control.

Hybrid blockchain: A blockchain that combines elements of both public and private blockchains. Hybrid blockchains are highly flexible and can be adapted to a variety of use cases.

Proof of work: A consensus mechanism used by some blockchains, where participants solve complex mathematical puzzles to validate transactions and add new blocks to the chain.

Proof of stake: A consensus mechanism used by some blockchains, where participants stake their digital assets to validate transactions and add new blocks to the chain.

Cryptocurrency: A digital or virtual currency that uses cryptography for security and operates independently of a central bank or government. Bitcoin and Ethereum are two well-known cryptocurrencies that run on blockchain technology.

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