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Understanding Blockchain

Written by Teroxx Editorial Team | Aug 12, 2025 12:25:33 PM

The increasing attention around blockchain technology makes understanding this revolutionary concept ever more important. Here is our simplified guide to get you started.

What is blockchain?
A digital ledger which forms a decentralized database of recorded and verified transactions. Once registered on the blockchain, this data cannot be altered - this bypasses the need for a central authority.

How does it work?
Each block in the chain is a collection of recorded transactions, and each block has unique identifiers which reference the previous block. The distribution of these blocks mean that the copies of the records across multiple storage locations must match for it to be valid.

What makes blockchain so secure?
Decentralization ensures no one single entity controls the whole system, and the visibility of all transitions to every network participant ensures integrity, accountability and transparency. The permanence of each block and irreversibility of data once entered, plus cryptographic techniques for security of transactions make blockchain extremely resistant to tampering.

How do transactions work?
The process can vary depending on the blockchain on which the transaction takes place, but all blockchain networks use consensus mechanisms to reconcile and consolidate the ledger. The most well-known algorithm is called Proof of Work (PoW) and is used by Bitcoin.

How efficient is blockchain?
Self-executing agreements known as smart contracts are automatic, are made on predefined rules and are executed when specific conditions are met. This removes the need for intermediaries, and the automation of the tasks makes transactions much faster - often a matter of seconds.

Multiple uses:
Blockchain is versatile and can be applied across various industries. The best-known is finance, where blockchain technology underpins cryptocurrency transactions and streamlines processes. Supply chain management is also a notable beneficiary of blockchain, where traceability and fraud reduction are both significantly enhanced. Healthcare is another field that can utilize blockchain’s advanced technology, with patient records able to be stored and shared in a much more secure way.

The descriptions provided about the above trends and products are all based on publicly available information, and as such cannot be considered as financial advice or encouragement to invest through them. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.

Information sources used in this article: ESMA, Investopedia, Coinbase