What Is Blockchain || How Blockchain Works || Blockchain Explained

Understanding Blockchain: The Technology Behind Cryptocurrency and Real-World Applications Like Walmart

• Ever wonder if there's an easier way to complete transactions without having to deal with online wallets, banks, and third-party applications?

• Well, it's possible, thanks to blockchain. Here's everything you need to know about blockchain.

• Imagine four friends, Jack, Ted, Sam, and Phil meet up for dinner. After they're done, Jack pays the bill, and all of them decide to split the expense amongst each other.

• Now, on the next day, when Phil sends his share to Jack via online money transfer, the transaction goes through without a hitch.

• Then, Ted and Sam send their respective shares to Jack, but their transactions don't go through. The failed transaction cites some issues at the bank.

• That's when Jack comes to know about the many ways a bank transaction could fail.

🏦 Bank transaction could fail due to:

• Technical issues at the bank

• One of their accounts were hacked

• Daily transfer limits being exceeded

• Additional transfer charges associated with transferring money

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💡 To solve these problems, the concept of cryptocurrency came into existence

• Cryptocurrencies are a form of digital or virtual currency that run on a technology known as blockchain.

• Thanks to blockchain:

  • Cryptocurrencies are immune to counterfeiting

  • Don’t require a central authority

  • Protected by strong and complex encryption algorithms

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🪙 In a market of more than thousands of cryptocurrencies like Litecoin, Ethereum, Zcash, and so on, one reigns supreme: Bitcoin

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🍽 Back to the dinner example:

• Phil, Ted, and Sam send Jack two bitcoins each as their contribution.

• Phil, Ted, and Sam have three bitcoins in reserve. Jack has five.

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📦 Transaction Process:

• Phil sends two bitcoins to Jack → A record is created in the form of a block.

• The transaction details are permanently inscribed in this block.

• The record also holds the number of bitcoins each of the friends own.

👉 So after Phil's transaction:

• Jack has seven bitcoins

• Phil has one

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• Then, Sam and Ted send two bitcoins to Jack. A new block is created for each.

• These blocks are linked to each other, referencing the previous one for balances.

➡️ This chain of records or blocks is called a ledger, and it is shared among all friends — acting as a public distributed ledger.

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🚫 What happens when Phil tries to send more than he owns?

• If Phil has only one Bitcoin left and tries to send two more:

• The transaction will not go through.

• All friends have the ledger and can see his balance.

• They flag the transaction as invalid.

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🔒 Why it’s secure:

• A hacker cannot alter blockchain data because:

  • Each user has a copy of the ledger

  • The data is encrypted with complex algorithms

👉 All of this is made possible with the help of blockchain technology

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📚 Definition:

Blockchain can be described as:
A collection of records linked with each other, strongly resistant to alteration and protected using cryptography.

 🔍 A closer look at a Bitcoin transaction between Jack and Phil:

• Every user in the Bitcoin network has two keys:

  • Public Key → Like an email address (known to everyone)

  • Private Key → Like a passwor

    d (known only to the user)

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🧾 Bitcoin Transaction Steps:

1. Phil passes the number of bitcoins, his wallet address, and Jack's wallet address through a hashing algorithm.

2. This forms the transaction details.

3. These details are encrypted using Phil's private key.

4. This digitally signs the transaction → proves it came from Phil.

5. The output is sent using Jack's public key.

6. The transaction can be decrypted only by Jack's private key.

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🔑 Different cryptocurrencies use different hashing algorithms:

• Bitcoin uses SHA-256

• Ethereum uses Ethash

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🛠 How are transactions validated?

• Transactions are added block by block

• Miners are individuals who verify these blocks.

• They solve a mathematical puzzle to verify a block.

• 12.5 Bitcoins are awarded to the first miner who solves it.

• The verified block is added to the blockchain.

👉 Proof of Work = solving the puzzle
👉 Mining = adding the block

• Everyone’s wallet, including Phil and Jack’s, gets updated accordingly.

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✅ Quick Test Time!

Question:
What is the blockchain concept that guarantees that no one can change data users within the network?

A: Public distributed ledger
B: Proof of work
C: Proof of stake
D: Hash encryption

💡 Let us know what you think is the right answer in the comments below. Three lucky winners will get Amazon gift vouchers. Details are mentioned in the description below.

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🛒 Walmart Case Study: Blockchain in Real Life

🧊 Problem Walmart faced:

• High return rate

• Large amounts of refunds due to bad quality

• Unable to determine the point of failure in the supply chain (farm → storage → transportation → processing → customer)

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✅ Solution with Blockchain:

• Quality of goods at each step permanently inscribed in a block

• If a product is damaged:

  • Blockchain pinpoints where in the supply chain the issue occurred

• Walmart can identify and fix problem areas