Simple explanation to understand what is and how a Blockchain works

You can not understand Bitcoin without understanding blockchain. Why? Because the main properties that differentiate Bitcoin from traditional currencies arise from the operation of Blockchain.

Blockchain is the backbone of Bitcoin. The blockchain technology is the first to allow both: resistance to censorship, decentralization, lack of trust in third parties, globality and neutrality.

Bitcoin is the first case of blockchain use, but there are already a large number of projects that use it for other purposes. For all this in this post I will try to explain its operation in a simple way, so that it serves as an introduction, and answering the questions that tend to arise more frequently.

For more depth, I recommend watching the following video, which explains it in a schematic way, and possibly easier to follow than reading a text.

What is Blockchain?

Blockchain is a database, organized in blocks. The brilliant thing about blockchain is that these blocks are written in a decentralized way, without anyone having to trust anyone else. It is the first 100% decentralized database, where thousands of nodes of a network can write without a central node organizing them.

What is stored in a Blockchain?

The transactions of the users in Bitcoin, are stored in blockchain. In the same way that the payments you make with a debit card are stored in a bank's database, transactions, whether payments or transfers, are also stored in a database, in this case blockchain.

The big difference is that although the database of a bank is private and maintained by the bank itself, blockchain is maintained by the Bitcoin community itself, and is public.

If you are not in a bank, where is that database hosted?

In the Bitcoin community, the miners are in charge of writing the transactions of the users in the blockchain, and of keeping it alive. Blockchain is hosted in each of the nodes that make up the network. These nodes are called miners.

What incentive do the miners have to maintain this database?

The miners receive commissions, for each transaction. In addition, each time a miner writes a block, they are given Bitcoin of new creation. Right now they receive 12.5 BTC. This figure decreases with time, and ends up being 0.

The fact that there are miners is fundamental for the health of the network, and hence the incentives to keep them in the network are important.

Who are the miners?

Anyone who installs the Bitcoin node software. You can download the software, and start mining today. In practice, it is very difficult to compete with China, where miners operate large areas of computers.

Who guarantees that there will always be miners?

There is no one to guarantee it. However, as long as there are people who use Bitcoin, there will be an economic incentive for there to be miners. Put another way, the guarantee that there are miners is the fact that Bitcoin has an incentive system that will make people to whom it comes to mind to become a miner.

If the database is public, how do I guarantee my privacy?

All the data is encrypted. Transactions are written so that only the originator and the recipient can access the content.

How to access the database?

Users must use wallets, which are the tool that allows operations to be sent to the database.

How do you prevent two miners from writing at the same time?

The system publishes a mathematical operation every 10 minutes. This operation must be resolved based on trial and error. Although all the miners try to solve at the same time, to the practice the chance causes that there is only one that hits the result, and that is the one that is going to have the right to write. It is statistically very unlikely that two miners will find the solution at the same time.

Can the state "turn off" blockchain, to avoid operations in Bitcoin?

To do this, you should turn off each of the network nodes on the ground. That is why it is said that Bitcoin is resistant to censorship.

Is Blockchain used for other things?

Blockchain is the data model used by all cryptocurrencies. There are also important projects that use blockchain in large central banks, and leading financial institutions.

How does it compare with the operation of a normal bank?

This question is important, but very broad. I recommend the following video that although a little long, picks up the answer, and includes the operation of wallets as well.