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How Does Blockchain Work|Explained for Beginners

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Are you eager to learn how blockchain works? Look no further than this informative video by Binance Academy! In this explainer video, you’ll discover that blockchain is essentially a decentralized digital ledger consisting of a list of data records. These records, called blocks, are organized chronologically and secured through cryptography. Throughout the video, you’ll delve into various topics including examples, the concept of a nonce, and the 51% attack. By the end, you’ll have a clear understanding of the principles behind blockchain technology. So grab a cup of coffee and get ready to dive into the world of blockchain with Binance Academy!

How Does Blockchain Work|Explained for Beginners

How Does Blockchain Work

Blockchain is a revolutionary technology that has gained a lot of popularity in recent years. It is a decentralized ledger that records all transactions made using cryptocurrencies like Bitcoin. But how does blockchain actually work? In this article, we will delve into the intricacies of blockchain technology and understand its underlying principles.


To better understand how blockchain works, let’s consider a simple example of a transaction between two individuals, Alice and Bob.

Transaction between Alice and Bob

Alice owes Bob 2 bitcoins for a product she purchased. To initiate the transaction, Alice broadcasts the details of the transaction to the network of computers known as nodes. These nodes are responsible for verifying the transaction.

Alice broadcasts the transaction to the network

Once Alice broadcasts the transaction, it is picked up by the nodes in the network. The nodes validate the transaction by checking various parameters, such as whether Alice has sufficient funds to make the payment.

Miners verify the transaction

After the nodes verify the transaction, it is then added to a pool of unconfirmed transactions. Miners, who are individuals or entities with powerful computers, compete with each other to solve a complex mathematical problem related to the transaction. This process is known as mining.

The block is added to the blockchain

Once a miner successfully solves the mathematical problem, the block containing the transaction is added to the blockchain. The blockchain is a chain of blocks, where each block contains a set of transactions. This chain is distributed and maintained by all the nodes in the network, ensuring the security and integrity of the transactions.

What is a Nonce

In the context of blockchain, a nonce (number only used once) is a random value that is included in a block during the mining process. Let’s explore the concept of a nonce and its role in blockchain technology.

Nonce definition

A nonce in cryptography refers to a random or pseudo-random number that is used only once. It is commonly used in various cryptographic algorithms to provide randomness and prevent replay attacks.

Nonce in blockchain

In blockchain, the nonce is a crucial component in the mining process. Miners add a nonce value to the block they are mining and repeatedly hash the entire block until they find a specific condition known as the target. The nonce value is adjusted until the resulting hash meets the target condition.

Finding the correct nonce

The process of finding the correct nonce involves trial and error. Miners try different nonce values and hash the block until they find a hash that meets the target condition. This requires significant computational power and is often a time-consuming process.

How Does Blockchain Work|Explained for Beginners

What is the 51% attack

While blockchain technology offers a secure and decentralized system, it is not without its vulnerabilities. One such vulnerability is the 51% attack. Understanding this attack is crucial in comprehending the security risks associated with blockchain.

Definition of 51% attack

A 51% attack, also known as a majority attack, occurs when an individual or a group of miners control more than 50% of the total computational power of a blockchain network. This gives them the ability to manipulate the blockchain by potentially reversing transactions or even double-spending.

Risk of 51% attack

The risk of a 51% attack is concerning because it undermines the fundamental principles of decentralization and security that blockchain technology aims to provide. If a malicious entity gains control of the majority of computational power, they can alter the blockchain’s history, making it susceptible to fraud and manipulation.

Preventing 51% attack

To prevent a 51% attack, blockchain networks often rely on consensus algorithms, such as Proof of Work (PoW) or Proof of Stake (PoS). These algorithms ensure that the majority of computational power is distributed among honest and trustworthy participants. Additionally, the more widely distributed and secure the network is, the less likely a 51% attack becomes.

How Does Blockchain Work|Explained for Beginners

Hashing Algorithm

A hashing algorithm in blockchain converts an input, such as a block of transactions, into a fixed-length string of characters. This process plays a crucial role in maintaining the integrity and security of the blockchain. Let’s explore how hashing algorithms work in the context of blockchain.

Definition of hashing algorithm

A hashing algorithm is a mathematical function that takes an input and produces a fixed-size string of characters, known as a hash value or digest. It is designed to be one-way, meaning it is extremely difficult to reverse-engineer the original input from the hash value.

Hashing algorithm in blockchain

In blockchain, each block contains a hash value that represents the entire block and its contents. This hash value is calculated using a hashing algorithm, such as SHA-256 (Secure Hash Algorithm 256-bit). Any change to the block’s data, even a minor alteration, would result in a completely different hash value.

Importance of hashing algorithm

The use of hashing algorithms in blockchain ensures data integrity and security. By comparing the hash values of blocks, nodes in the network can easily detect any tampering or unauthorized modifications. This enables the blockchain to maintain its transparency and immutability.

How Does Blockchain Work|Explained for Beginners


In conclusion, blockchain is a revolutionary technology that provides a secure and decentralized system for recording transactions. By understanding the concepts of mining, nonces, 51% attacks, and hashing algorithms, we can appreciate the underlying principles that make blockchain an innovative solution. As blockchain continues to evolve and find applications in various industries, it is essential to stay updated on its working principles.

I am Jesse, The head author and writer at, the go-to resource for all your crypto capital news. As the tagline suggests, I provide in-depth analysis, breaking down complex blockchain mechanisms, market trends, and the socio-economic impacts of cryptocurrencies. If you're new to the crypto scene, my beginner guides will take you from novice to knowledgeable in no time. Stay up to date with real-time news from the ever-evolving cryptocurrency markets and engage with a community of like-minded individuals through our forum discussions and events. With expert reviews, a comprehensive resource library, and a focus on security and privacy, Mutual Capital Crypto is your trusted source for all things crypto.