How blockchain works

🔗 Process of Blockchain: How It Works Step by Step

Explore the entire journey of a blockchain transaction — from digital authentication to final verification — and learn how it revolutionizes data transparency and security.

📘 Table of Contents

• 📌 1. Transaction (Authentication)
• 📌 2. Transaction Broadcasted
• 📌 3. Nodes Validate the Transaction
• 📌 4. Validated Transaction Added to Block
• 📌 5. New Block Added to Blockchain
• 📌 6. Transaction Complete

🔐 1. Transaction (Authentication)

Every blockchain transaction begins with authentication using cryptographic keys. Each user has:

• Private Key: Known only to the user and used to sign the transaction.
• Public Key: Shared with the network to verify authenticity.

These keys work together to form a digital signature that confirms the origin and intent of the transaction. This mechanism ensures that the transaction hasn’t been altered and is genuinely initiated by the user.

📡 2. Transaction Broadcasted

After signing, the transaction is broadcast to a **peer-to-peer (P2P) network** of nodes. These nodes are individual computers or servers that maintain a copy of the blockchain ledger.

- Broadcasting allows **decentralization**, as no central authority is required. - Nodes listen for new transactions and prepare them for validation by consensus.

🔎 3. Nodes Validate the Transaction

Validation is performed using a **consensus mechanism**, ensuring agreement among network participants that the transaction is valid. Common methods include:

• Proof of Work (PoW): Requires nodes (miners) to solve a complex puzzle, ensuring time and effort are invested.
• Proof of Stake (PoS): Relies on validators who "stake" coins to confirm transactions based on their holdings and trustworthiness.

This step ensures that double-spending, fraud, or manipulation is impossible.

📦 4. Validated Transaction to New Block

Once a transaction is verified, it is grouped with other validated transactions into a **block**. Each block contains:

• Data: A list of recent validated transactions.
• Hash: A unique identifier for the block.
• Previous Hash: Linking to the previous block for continuity.

The block is then prepared for addition to the blockchain, typically requiring miners (in PoW) to solve a final cryptographic challenge.

🔗 5. New Block Added to Blockchain

Upon successful creation and validation, the block is **permanently added** to the blockchain:

• It becomes part of the ledger visible to all nodes.
• It’s **time-stamped** and immutable — no edits can be made after insertion.
• Each block connects to the next, forming a **tamper-proof chain**.

This structure enhances the **security, transparency, and integrity** of data across the network.

✅ 6. Transaction Complete

The transaction is now considered **final**. Every node in the network updates its copy of the blockchain to reflect the new block.

- This **distributed consensus** ensures trust without a central authority. - Blockchain’s design allows **auditable and transparent records** accessible to all participants. - The cycle repeats for every new transaction, maintaining a secure and efficient ecosystem.

🌍 Real-World Applications of Blockchain Process

• 💸 Cryptocurrencies: Bitcoin, Ethereum — enabling peer-to-peer digital payments.
• 🏥 Healthcare: Securing patient records and preventing data breaches.
• 📦 Supply Chain: Tracking goods from origin to consumer with transparency.
• 📑 Smart Contracts: Self-executing agreements without intermediaries.

📚 Related Articles from Infokie

• 🔗 What is Cryptocurrency?
• 🔗 What is Blockchain and How It Works?
• 🔗 Unknown Facts About Blockchain
• 🔗 Benefits of Blockchain

💬 Share Your Thoughts

What are your views on blockchain’s impact? Join the conversation in the comments below! 👇