Connecting the ... blocks

So how does it all connect?  

Every block does not only carry its own fingerprint, but it also carries the fingerprint of the block that came before it — exactly where the “chain” in blockchain came from.  Each block is linked with the one before, making them locked with each other and breaking if one is altered. 

Think about the Butterfly effect and the idea that one extremely small change could alter everything that happens after. This is exactly what happens here. If someone tampered with an old block and changed one character, it would have changed. But now that block’s fingerprint no longer matches what the next block has stored as its previous hash. And the next one, and the next one and every single black that has ever come after the tampered is now invalid. 

Let’s now switch over to the network itself and understand why it matters just as much as everything happening within the blocks.   

Firstly, it is important to understand that the blockchain is not stored in one specific place.  It is distributed across networks of computers, and every single one holds the exact same copy of that blockchain.  

This network is like a neighborhood watch.  Every house on the street is watching at the same time, and it would be obvious if someone tried to break into a house, as people would see. The same idea applies here. Even if a hacker somehow successfully got access to someone’s computer on the network and tried to steal something from the blockchain, it would not matter.  Every other computer on the network still has the correct copy and would reject the changed version.  The difference between the neighborhood watch and this is the sheer scale of it.  On the blockchain network, there would be thousands of computers spread around the world, all watching the same blockchain at the same time. 

This is exactly what decentralization represents.  

And don’t worry, even if there is no person sitting at a computer getting a notification if a copy is changed, it is all automatically watched. The computers themselves, called nodes, are constantly checking each copy every second.  

Finally, we need to understand how a transaction gets added to the blockchain in the first place.   

The network needs to come to a mutual agreement that the transaction is legitimate and not made up.  This is called a consensus, and you now might be wondering how the network can autonomously approve or deny a claim. 

When someone creates a transaction, it gets shown to the whole network and each computer on the network receives it at the same time. Each computer then, independently needs to check the same boxes: 

• Does the sender have enough funds to cover what they are trying to send? 

• Has the money already been spent somewhere else?  Unlike cash, digital currency can be copied and can be spent twice.  

• Does everything about this activity match the existing blockchain? 

Does this sound familiar to what we learned before? Proof of Work and Proof of Stake are both consensus mechanisms, meaning they are the different systems the network uses to agree on which transactions are valid.   

Conclusion 

Being able to understand blockchain and explain the different parts of it is a skill that most people do not have.  

Most people have heard of crypto, but few people understand that blockchain is the underlying technology that makes this possible in the first place.  Something similar happened in the 90s, where people had felt like this thing called the “internet” was unnecessary and confusing. Blockchain might seem similar to how people felt about the internet originally, until everyone cannot see a world without. 

Crypto is built on blockchain, but blockchain is significantly bigger than crypto. It is a change in the way the world transfers information.