Blockchain for Dummies: What Exactly Is the Blockchain and How Is It Used?

July 11, 2019 • Zachary Amos


You’ve probably heard about the blockchain, but since you’ve come across this Blockchain for Dummies article, you likely don’t have any idea what the blockchain is and how people might use it.

No worries. Keep reading to get the rundown on this emerging technology.

What Is the Blockchain?

Think of the blockchain as a record of digital information. An individual record represents one block, and cryptography links all the blocks together.

A block contains a timestamp, the information and a cryptographic hash of the previous record existing in the blockchain. It’s also worth mentioning, in case you don’t know, that a cryptographic hash uses an algorithm to turn any data into a unique text string.

So, in the case of the blockchain, the cryptographic hash identifies any block of transactions. Also, because each block contains the hash of the record before it, it’s difficult for cybercriminals to tamper with one block in ways that go undetected for very long. That’s because altering one block affects all the others.

Keep in mind that although the blockchain is a safer form of recording data than many other solutions, it is not infallible. Hackers have discovered methods of accessing the blockchain and causing disruptions. That means as people continue to research how to use the blockchain, they’ll also have to stay abreast of methods to keep it safe from manipulation.

How Does Information Get Added to the Blockchain?

Something that you may be wondering as we move through this Blockchain for Dummies discussion is who decides what information goes on the blockchain and verifies its accuracy. One thing that makes the blockchain a preferred option for dealing with some types of information is that all of the data contained on the blockchain gets subjected to a validation process first.

The blockchain is a distributed ledger, which means the data on it gets approved by members of the blockchain’s network, synched and shared between them. No new data appears on the blockchain until members agree it should after going through a validation procedure.

A blockchain’s validators reach consensus by going through an agreed-upon process that legitimizes the information on the blockchain. One common validation method is proof of work, whereby people called “miners” use specialized, powerful computing equipment to solve math problems to approve the information. They get rewarded for being the first to solve an equation.

There are other ways of validating the information whereby people use their reputation and association with the blockchain to get the right to approve information for the blockchain. In those cases, individuals could lose the right to view or authorize any other transactional data on a given blockchain.

Once the validators reach consensus and add information to the blockchain, it’s impossible to delete that data from the ledger.

Even better, information on the blockchain is publicly accessible at a website called Block Explorer. That level of visibility gives transparency that benefits many real-world applications covered in the next section. For example, think of supply chain monitoring. Each party handling an item in transit could have a record on the blockchain, allowing a recipient to track its progress.

How Do and Could Companies and People Use Blockchain Technology?

Many people quickly associate the blockchain with cryptocurrencies, such as Bitcoin. The blockchain facilitates the transfer of cryptocurrency funds and allows people to see records of those transactions. Additionally, some analysts think blockchain will be instrumental in promoting user privacy by giving people more control over where their data goes and who uses or sees it.

Also, in one example of how blockchain could contribute to medical advancements, a company already exists that uses the blockchain to let users specify which parties can see their health records. When they give access, those people get compensated with tokens. A person using that platform can make their records accessible to a party for a limited window of time. That could be helpful if a researcher wants short-term access to supplement an ongoing study.

There are also several companies looking into how blockchain could improve the voting process in an event like the presidential elections. Once an individual’s vote gets entered on the blockchain, the idea is that an election official or any other outside party could not remove or alter that person’s entry.

IBM also has a blockchain solution used by brands including Nestlé and Starbucks that helps those companies trace their products. Then, instances like food poisoning or production issues that lead to recalls could dramatically reduce.

An Option With Plenty of Potential

Now that we’ve reached the end of this Blockchain for Dummies journey, you hopefully feel like blockchain is not as overwhelming as you thought at first. The technology itself is complicated, but it’s possible to gain an understanding of how blockchain works even if you don’t initially have a grasp of the basics.