Blockchain is a decentralised and distributed digital ledger technology that records transactions across multiple computers (or nodes) in such a way that the information can be viewed but not modified without altering all subsequent blocks. It is the underlying technology for cryptocurrencies like Bitcoin, but its applications go beyond just digital currencies. Here’s a step-by-step explanation of how it works:
1. Transaction Initiation:
When a user initiates a transaction (e.g., sending cryptocurrency to another user), the transaction details, including the sender’s and recipient’s addresses and the amount, are created.
2. Transaction Verification:
Before being added to the blockchain:
- The transaction is broadcast to a network of computers, known as nodes.
- These nodes validate the transaction using a set of predetermined algorithms. For cryptocurrencies, this would involve verifying the sender has enough funds for the transaction.
- Once verified, the transaction is placed in a pool with other verified transactions, waiting to be added to the…