Crypto 101 with Vin: Blockchain

4 min readFeb 18, 2022

Hello, Reader. I’m Vin, AKA Kakavarna.

In the first article of this no frills series of blog posts, we will answer the question:

What is the blockchain and how does it work?

The blockchain in the simplest sense is quite literally a chain of digital blocks. Blocks are containers with limited space to hold groupings of data. This data is a record of a transaction which at minimum has the amount of an asset sent, the sender, the receiver, and a transaction hash not shown below.

Example of transaction data you might find on a blockchain explorer like

The 3 special properties of a blockchain are as follows:

  1. It is distributed meaning transactions only need to be recorded once so that the effort does not have to be repeated
  2. It is immutable in such a way that it cannot be tampered or changed after a transaction is recorded
  3. Lastly because the the blockchain is distributed and and immutable, it is inherently a transparent source of truth

How is a blockchain distributed?

A blockchain is hosted on many computers(nodes) across the globe. Since the point is to not have a central authority, the nodes interact peer-to-peer(p2p.) These nodes can serve various functions, but in the end they are a participant in the blockchain network. The most critical function a node performs is validating transactions. This ensures the security of the chain by making sure each node is on the same page about the state of the chain.

Validation is achieved via consensus algorithms. By very definition of the word, consensus, the nodes have to agree on the state. I will not detail specific consensus algorithms in this introductory lesson, but the OG algorithm is Bitcoin’s proof-of-work(PoW) which relies on using hardware resources to do computational work. You will also hear about proof-of-stake(PoS) which achieves the same goal as PoW , but significantly reduces the computational work. These are the two most popular, but be aware that there are more.

How is a blockchain immutable?

Immutability in crypto is the result of cryptographic hashes. A hash function takes some input data and turns it into a unique output of a predetermined length called a hash. The most common hash function is SHA-256. The 256 indicates an output hash of 256 bits. We use these functions because it is difficult to reverse engineer the input data. It is used to secure your credentials you check out at an online retailer to secure your data and in many other cases.

Hash example (source:

We know that the result of the hash function is a unique output depending on the data that gets put in. A single hash is not too difficult to break with enough computing power so lets introduce the idea of chaining blocks into our hash function. The more hashes a bad actor has to break, the more difficult it is for them to change the state of a blockchain. As nodes add more blocks, it gets increasingly difficult.

Hashing blocks example (source:
  1. The first block is called the genesis block. It has no previous hash to rely on so the input to the hash function is simply the block data. It produces a hash.
  2. The 2nd block combines its block data and the hash from the previous block to make up its input which is then used to make the hash for the 2nd block.
  3. The 3rd block does the same as the 2nd step as do any subsequent blocks

Eventually to change a certain block in the past it becomes too difficult due to the number of hashes an individual has to break. Therefore the only plausible way to deceive the network is to control more than 50% of the nodes to convince the remainder that the blockchain has a certain state. As long as there a many nodes, it will be difficult for a single entity or group of individuals to gain that majority control.

In Conclusion…

These properties in combination are what make blockchain technology so desirable. It takes control away from centralized authorities like governments and corporations and brings a new level of security to asset ownership so long as that asset is recorded on the blockchain.

Thanks for reading and check in next time.

Kakavarna.eth — Automation Engineer(9–5), crypto investor, and gamer with opinions




Kakavarna.eth — Automation Engineer(9–5), crypto investor, and gamer with opinions