What is Blockchain Technology? How Does it Work?

As recorded in our guide “What is Blockchain Technology?”, there are main three principal technologies that combine to create a Blockchain. None of them are unique. Rather, it is their disorganization and application that is the latest. 

These are technologies’ main types of crypto in one private key cryptography, and second a distributed network with a shared ledger, and 3 an incentive to service the network’s transactions, security, and record-keeping.

The following explains how these technologies work together to confirm digital relationships.

Cryptographic keys

Each of them holds a public key. the private key and a private key.

The main motive of this Blockchain technology is to produce a safe Digital identity reference. Identity is based on the control of a mixture of public and private cryptographic keys.

These keys can be seen as a dexterous form of approval, creating a beneficial digital signature.

But strong control of ownership is not enough to secure digital connections. While authentication is solved, it must be combined with a means of approving transactions and approval (authorization).

A Distributed Network

The benefit and need for a distributed network can be understood by the ‘if a tree falls in the woods thought experiment.

If a tree falls in the woods, with cameras to video its fall, we can be pretty confident that the tree fell. We have observable proof, even if the particulars (why or how) may be unclear.

Much of the value of the bitcoin blockchain is that it is a big network where validators, like the cameras in the analogy, reach a consensus that they saw the same thing at the same time. 

System of record

When cryptographic keys are connected with this network, a super useful form of digital interaction emerges. The process begins with A taking their private key, making information of some sort — in the case of Bitcoin(BTC), that you are mailing a sum of the cryptocurrency — and connecting it to B’s public key.


A block – including a digital signature,  relevant information, and timestamp – is then broadcast to all nodes in the network.

A realist strength challenges the tree falling in the forest through an experiment with the following question: Why would there be a million computers with cameras waiting to video whether a tree fell? It means how do you attract computing power to service the network to make it safer.

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