The Basics Of Blockchain

In 2008, an anonymous individual or group called Satoshi Nakamoto released a whitepaper introducing Bitcoin: a peer-to-peer electronic cash system that did not require banks. But behind Bitcoin was a more revolutionary concept; a distributed ledger system called blockchain.

Since then, blockchain has evolved beyond cryptocurrency. It now powers smart contracts, decentralised finance (DeFi), NFTs, supply chains, and even digital identities. But what is blockchain really? And how does it work?

The Origins of Blockchain

To understand blockchain, let’s rewind.

• 1991: Two scientists, Haber and Stornetta, propose a way to timestamp digital documents to make them tamper-proof. This laid the groundwork for blockchain.
• 2008: Satoshi Nakamoto combines cryptography and distributed computing to solve the “double-spending” problem in digital money. Bitcoin is born.
• 2009: The first blockchain is launched to support Bitcoin.
• 2015: Ethereum is launched. It adds smart contracts to blockchain, allowing developers to build decentralised applications.
• 2020s: Blockchain expands into finance (DeFi), art (NFTs), and more.

What Is a Blockchain?

A blockchain is a shared digital ledger.

Picture this:

You and a group of friends each have a notebook. Every time someone makes a transaction, everyone writes it down. If someone tries to cheat and change an entry, their notebook won’t match the others — so the network ignores it.

This is essentially how blockchain works.

Each page in the notebook is a block. When one page is full of transactions, you seal it and start a new one. Each page also contains a fingerprint (called a hash) of the page before it, linking them together in a secure chain.

That’s why it’s called a block–chain.

Visualising a Blockchain

Here’s a simplified flow:

[ Block 1 ] → [ Block 2 ] → [ Block 3 ] → [ Block 4 ]

Each block contains:

• A list of transactions
• A timestamp
• A fingerprint (hash) of the previous block
• Its own hash

If you try to change Block 2, Block 3 and Block 4 would no longer match. The chain breaks. This is how blockchain stays secure.

How Blockchain Works: Step-by-Step

Let’s say Alice wants to send 1 Bitcoin to Bob.

1. Transaction is Requested

• Alice signs the transaction with her private key.

2. Broadcast to Network

• The transaction is shared with a decentralised network of computers (called nodes).

3. Validation

• Nodes verify the transaction using rules (called consensus mechanisms).

4. Block Creation

• Verified transactions are grouped into a new block.

5. Linking the Block

• This new block is attached to the chain with a cryptographic link.

6. Transaction is Complete

• The transaction is now permanent and visible to all.

What Makes Blockchain Secure?

There are three key ingredients:

1. Cryptographic Hashing

Every block has a digital fingerprint. Even the tiniest change creates a completely different hash, making tampering obvious.

2. Decentralisation

Thousands of nodes hold a copy of the ledger. There’s no single point of failure or control.

3. Consensus Algorithms

These are the rules nodes follow to agree on the state of the blockchain. Popular ones include:

• Proof of Work (PoW): Computers race to solve puzzles. Used by Bitcoin.
• Proof of Stake (PoS): Validators are selected based on how much crypto they own. Used by Ethereum 2.0.

Different Types of Blockchain

There are several flavours of blockchain depending on how open or restricted they are:

Public Blockchains

• Open to anyone.
• No permissions needed.
• Example: Bitcoin, Ethereum.

Private Blockchains

• Controlled by a single organisation.
• Used for internal enterprise use.
• Example: Hyperledger.

Consortium Blockchains

• Controlled by a group of trusted entities.
• Used in industries like supply chain or banking.
• Example: IBM Food Trust.

Real-World Applications

Blockchain is no longer just for crypto enthusiasts. It’s finding a place in real industries:

• Finance: DeFi lending, stablecoins, and faster payments.
• Supply Chains: Track goods from source to shelf with full transparency.
• Healthcare: Secure and portable patient records.
• Voting: Tamper-proof digital voting systems.
• Art & Music: NFTs for ownership and royalties.

Blockchain for Builders

If you want to build on blockchain, here are the tools and languages you should know:

• Solidity: Smart contract language for Ethereum.
• Rust: Used for fast blockchains like Solana.
• Golang: Used in Cosmos and Hyperledger.
• Python: Great for prototyping and data analysis.

Here’s a tiny smart contract in Solidity:

pragma solidity ^0.8.0;

contract HelloBlockchain {
    string public message = "Hello, World!";
}

This stores a public message on the Ethereum blockchain. Anyone can read it.

Summary: Why It Matters

Blockchain is a new way of recording and verifying information — without needing to trust a central authority.

It’s:

• Transparent
• Tamper-proof
• Decentralised

But most importantly, it’s just getting started.

As AI, finance, and Web3 evolve, blockchain will be the infrastructure that powers trust in a digital world.

If you want to learn how to combine blockchain with finance, smart contracts, or AI tools like GPT, follow this series. The next chapters will go deeper into smart contracts, DeFi, and tokenisation with code examples and real-world case studies.

This is the first chapter of the book“Beyond Blockchains and Crypto” which will be released over the summer in paperback.