Blockchain - the basics

1. Blockchain in short

A blockchain is a digital chain of blocks:

• Each block contains:

  1. Transactions or data (for example, who sends money to whom)
  2. A hash of its own block
  3. The hash of the previous block

• Why this matters: It ensures that every block is linked to the previous one, and that the chain cannot be changed without it being noticed.

2. What is a hash?

• A hash is a unique digital code that is calculated from the contents of a block.
• Think of it as a fingerprint of the block: if you change even the smallest detail in the block, the hash changes completely.
• This is how the network knows: “Hey, this block was changed — something is wrong!”

Analogy:

• You write a letter and seal it with a special stamp (the hash).
• If someone changes the letter, the seal no longer matches. Everyone can immediately see that it’s been tampered with.

3. How blocks are linked together

• Each block contains the hash of the previous block.

• So if someone tries to change an old block:

  1. The hash of that block changes.
  2. The following blocks no longer match, because their “previous hash” is no longer correct.
• This makes fraud almost impossible.

4. How consensus mechanisms (PoW / PoS) fit into this

• Proof of Work (PoW): Computers must solve a difficult puzzle to add a new block. This proves that the block is legitimate.
• Proof of Stake (PoS): People with more coins are selected to add new blocks.
• Result: Only blocks that are valid and approved by the network are added to the chain.

5. Security summary

• Hashing = every block is unique and cannot be changed unnoticed
• Previous hash = blocks form a chain → changing one block breaks everything after it
• Consensus mechanism = the network decides who may add a new block → prevents cheating

Short example:

• Block 1 → hash: ABC
• Block 2 → hash of its own content + reference to ABC
• Block 3 → hash of its own content + reference to the hash of Block 2
• Try to change Block 2, and Block 3 no longer matches → everyone sees it immediately.

---