These days it is hard to find someone who has not heard of cryptocurrency and related things. Yet far from everyone understands how blockchain works and what it is for. Let us make sense of it without unnecessary terminology or convoluted phrases.
Storing data
Blockchain technology was invented to store data. Any data. One of its main advantages is strong security combined with full transparency. All the information is stored in encrypted form, divided into blocks. The blocks are distributed across several computers on the same network.
Each block is secured by its own unique hash - a string of characters of a strictly defined length. Special algorithms handle that.
If one user changes something in their block, the other participants in the chain find out immediately. The name "blockchain" literally means a chain of blocks. As a result, it is practically impossible to steal or forge data in the system. That property of blockchain is now actively used in banking operations.
Blockchain and money
Picture a ledger recording every operation on your account - one you can access at any moment to check that everything is in order. The new technology gives depositors and regulators better control over a bank's activity. Leading banks are already gradually adopting it.
And of course we cannot ignore the world of cryptocurrencies. Blockchain made it possible to create money whose value does not depend on political decisions, inflation or other such factors. But that subject deserves an article of its own.
Other areas of life
The "chain of blocks" has uses well beyond finance. Moving medical records into this format could cut the number of medical errors, since all prescriptions would be openly accessible. In logistics and delivery, blockchain lets you instantly see where a shipment is and the route it has taken. In elections it could let you verify that your vote went to the candidate you chose, reducing fraud and irregularities to a minimum. Blockchain would also help enormously in monitoring budget spending, making every movement of funds visible.
We hope that after reading this article you have found your answer to the question "How does blockchain work?"
