How does Blockchain work?
The cornerstone of a true cryptocurrency is blockchain . Having a fundamental understanding of how it works will help you understand how your funds are stored on the chain.
The Transaction
Jane uses a wallet application on a phone to send money to Sally.
Create the link
The magic of blockhchain is in the link. Once the current block is full the previous block is scanned and a unique “hashcode” is created. The hashcode is a way to “fingerprint” the previous block.
Network Checks
The transaction is then checked by a network of computers all running the same software. The network will ensure that Jane has enough funds in her wallet to cover the transaction and that she’s not trying to spend the same money somewhere else at the same time.
Add to the chain
The system then adds the hashcode of the previous block to the current block. Once this is complete it is extremely difficult to make changes to the blockchain. The farther back you go the more and more work has to be done to create a new hashcode for all of the blocks that have been changed. Once a block is added to the chain we consider it permanent. While there are blockchains that have “rolled” back to fix a transaction, it is very rare.
All Blocked up
Once the transaction is validated by the network, it’s added to the current block. A block is just a group of transactions.
Blockchain Features
These are the fundamental steps to add a transaction to a blockchain. Not all crypto currencies are created equal. Blockchain systems will continue to increase in complexity, especially in the ways that they add features to the cryptocurrency. There are terms like staking, voting, consensus, masternodes and more. These are ways that these projects govern themselves.
The Blockchain
