How blockchain works
Process of Blockchain
Understanding how blockchain transactions work step by step.
Table of Contents
🔐 Transaction (Authentication)
Blockchain transactions rely on **cryptographic keys**—a combination of a **private key** (known only to the user) and a **public key** (visible to everyone). - These keys create a **digital identity** that allows users to authenticate transactions securely. - Digital signatures **validate** the transaction before sending it into the blockchain network.
📡 Transaction Broadcasted
Once authenticated, the transaction is **broadcasted** to the network. - It is shared with multiple **nodes (computers)** that maintain the blockchain. - Each node keeps a copy of the blockchain and listens for new transactions.
🔎 Nodes Validate the Transaction
Nodes perform **transaction validation** using consensus mechanisms such as: - **Proof of Work (PoW)** – Requires solving complex mathematical puzzles (mining). - **Proof of Stake (PoS)** – Uses staking to verify transactions. - Each node ensures that the transaction is legitimate and follows the blockchain protocol.
📦 Validated Transaction to New Block
- Once validated, the transaction is grouped with others to form a **new block**. - The block gets a **unique hash**, ensuring security and integrity. - Miners must solve the cryptographic puzzle before adding it to the blockchain.
🔗 New Block Added to Blockchain
- The new block is permanently **linked** to the previous block. - This creates a **chain of blocks** (hence the name "Blockchain"). - Tampering with past transactions is **impossible** due to cryptographic hashes.
✅ Transaction Complete
- The transaction is now **final and immutable**. - Every node updates its copy of the blockchain. - The process repeats for future transactions, making blockchain **transparent and secure**.
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