Blockchain

At a high level of abstraction, here's how any blockchain works: Someone on the network proposes a block containing a list of recent transactions. Then other network participants verify that the block follows the network's rules. If a sufficient number of other network participants accept the block, it becomes the "official" next block in the chain. As long as most network participants are honest, users can have confidence that transactions accepted by a majority of the network won't be removed or modified later.

The big challenge for any blockchain project is preventing a malicious party from creating many sock puppet accounts to "stuff the ballot box," outvote the honest participants and thereby tamper with past transactions. Bitcoin's pseudonymous founder Satoshi Nakamoto's big insight—the one that made bitcoin possible—was that this problem could be solved using the principle of "one hash, one vote." On the bitcoin network, whoever has the most computing power—specifically, the capacity to compute SHA-256 hashes—has the most influence over which blocks get added to the blockchain. As long as honest miners have more hash power than malicious miners, users can be confident in the integrity of the blockchain—and hence in the integrity of payments made using the bitcoin network.

One of the better blockchain explainers I’ve seen.


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