Imagine a notebook that everyone can see and write in, but no one can erase or secretly edit. That’s the basic idea behind blockchain – a digital ledger (or database) shared across many computers.
Blockchain is a decentralised system, meaning no single person or company controls it. Instead, it relies on a network of computers working together to record and verify information. Once data is added to the blockchain, it’s incredibly hard to change, making it useful for recording things like transactions, contracts, and even digital ownership (as in the case of NFTs).
A blockchain is made up of three main parts:
When someone makes a new transaction, it’s broadcast to the network. The nodes check if the transaction is valid, and if most of them agree, the transaction is grouped into a block. That block is then added to the chain.
Understanding blockchain starts with a few important ideas. These terms often come up in articles and discussions, so it’s helpful to know what they actually mean:
Decentralisation. In most systems today (like banks or social media), a central company or authority is in control. In a decentralised system like blockchain, there is no single owner. Instead, many computers (nodes) share the responsibility. This helps prevent fraud and censorship, because no single person can secretly change things.
Immutability. Once something is added to a blockchain, it can’t be changed or deleted – not by anyone. This is called immutability. It means the records are permanent and tamper-proof, which is one reason blockchain is trusted for things like money and contracts.
Transparency. Most blockchains are public, meaning anyone can view what’s on them. You can see every transaction, when it happened, and which wallet addresses were involved. Even though the data is open, the identities behind wallet addresses are usually hidden – so you can see what happened, but not necessarily who did it.
Consensus Mechanism. Since there’s no central authority, blockchain networks need a way for all the computers (nodes) to agree on what’s true. That’s where a consensus mechanism comes in. It’s a set of rules that helps everyone stay in sync.
Here are two common types:
Blockchain might feel like a very modern invention, but the ideas behind it started forming several decades ago. Here’s how it all came together:
Before Blockchain: The Early Ideas
The concept of storing data in linked blocks (like a digital chain) dates back to the early 1990s. In 1991, two researchers – Stuart Haber and W. Scott Stornetta – came up with a system to timestamp digital documents, so they couldn’t be altered later without being noticed. This was one of the first building blocks of blockchain.
2008: The Birth of Blockchain
The real breakthrough came in 2008, when a mysterious person (or group) using the name Satoshi Nakamoto published a paper called: “Bitcoin: A Peer-to-Peer Electronic Cash System”
This paper introduced Bitcoin, the first digital currency that worked without a central authority like a bank. It also described the technology behind it – blockchain.
Fun fact: To this day, no one knows who Satoshi Nakamoto really is.
2009: Bitcoin Goes Live
In January 2009, the Bitcoin network officially launched. The very first block of the blockchain, known as the Genesis Block, included a hidden message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
This was a reference to a newspaper headline and possibly a quiet protest against traditional banking systems.
2015: Ethereum and Smart Contracts
Blockchain took a big step forward with the launch of Ethereum in 2015. Created by programmer Vitalik Buterin, Ethereum wasn’t just for currency. It introduced the idea of smart contracts – small programs that automatically run when certain conditions are met.
This made blockchain useful for much more than money, such as apps, games, NFTs, and digital agreements.
Today: More Than Just Crypto
Now, blockchain is used in many areas:
And it’s still evolving.
Blockchains are like living systems – they need to adapt and grow. Sometimes, changes to the rules of a blockchain are necessary. These changes are called forks, and they come in two main types: soft forks and hard forks. Let’s break it down.
What is a Fork? A fork happens when the developers or community decide to change the blockchain’s code. It’s like updating the rules of a game. But with thousands of participants around the world, everyone has to agree on the new rules – or not. There are two ways this can go:
Soft Fork: A Gentle Update
A soft fork is a change that’s backward-compatible. This means that old and new nodes (computers in the network) can still work together.
Why it works: As long as a majority of the network upgrades, the old version doesn’t break.
Hard Fork: A Split in the Road
A hard fork is a more dramatic change. It is not backward-compatible – which means nodes that don’t upgrade can no longer interact with the upgraded chain.
Famous hard forks:
Why Forks Happen
Forks can happen for many reasons:
Forks are a natural part of blockchain evolution, showing that the technology is open, flexible, and governed by the people who use it.
Not all blockchains work the same way. Some are open to everyone, while others are restricted to specific users or organisations. Here's the difference:
Public Blockchains
Public blockchains are completely open and decentralised. Anyone can join the network, read the data, or add new transactions.
Think of public blockchains like Wikipedia: anyone can view it, and with the right permissions, anyone can contribute. But everything is recorded and traceable.
Private Blockchains
Private blockchains are restricted and controlled by a single entity or a group.
A private blockchain is more like an internal company database – it uses blockchain principles but limits who can participate or see the data.
While blockchain is a powerful and exciting technology, it’s not perfect. There are still many challenges that need to be solved before it can reach its full potential.
1. Scalability
Blockchains can struggle to handle a large number of transactions at once. For example, Bitcoin and Ethereum can only process a limited number of transactions per second – much less than systems like Visa or Mastercard.
2. Energy Consumption
Some blockchains, especially those using proof of work (like Bitcoin), consume a lot of electricity.
3. Storage Limits
Blockchain data grows over time, and every full node needs to store the complete history of transactions.
4. Regulation and Legal Uncertainty
The legal status of blockchain-related projects (like cryptocurrencies or NFTs) is still unclear in many countries.
5. User Experience
Using blockchain apps (wallets, dApps, etc.) can still be confusing for beginners.
6. Centralisation Risks
Even though blockchains are designed to be decentralised, some networks end up being controlled by a few large players (like mining pools or validator groups).
By now, you’ve taken your first deep dive into the world of blockchain - and you’ve learned that it’s not just about Bitcoin. Let’s quickly go over the key takeaways:
Whether used for cryptocurrencies, supply chains, digital identity, or voting systems, blockchain has the potential to change the way we trust and exchange information.
And the best part? You don’t need to be a tech expert to understand or use it – you just took your first step.
