Blockchain

So, what exactly is this revolutionary blockchain?
As I already mentioned, blockchain is a technology that allows us to easily verify the truthfulness of individual records without having to ask a central bank for confirmation.

Let’s try to explain it with a simple example.

Imagine a small group of friends who lend various things to each other.
Ján lends flour to Klára.
Marek lends honey to Mária.
Mária lends a book to Ján.

To avoid forgetting who lent what to whom, they decide to write all loans down on paper. But instead of one person keeping the list, every member of the group owns an identical copy of it.

Whenever a new loan occurs, they all meet together and record the transaction in their own list.

Everyone has the same data, so they can verify the authenticity of the records at any time.
They use a special pen that cannot erase anything — no changes to history are possible.
Each new entry builds on the previous one, so if someone tried to falsify a past transaction, they would have to rewrite all the subsequent entries in all copies at once.
If someone tried to cheat and add something extra, everyone else would immediately notice that their version does not match the others.

This is roughly how blockchain works — a digital version of such records that are very easy to verify and impossible to delete.

Every transaction that happens in the Bitcoin network within a certain period (approximately 10 minutes) is written into a single block.
When a block is full, a new block is created, which builds on the previous one.
Each block contains information about the previous block, forming a chain of blocks — the blockchain.

This system ensures that if someone wanted to change data in any previous block, they would have to modify all the following blocks on every copy of the blockchain across the entire network.
Since the blockchain is distributed among thousands of computers around the world, such manipulation is practically impossible.

Let’s make it a bit more complicated.
How is it ensured that each block links to the next one, and that any attempt to change old data affects the entire chain?

This is possible thanks to cryptography.
At the end of each block, there is a specific number — a cryptographic hash — which represents the entire content of that block.

Each block in a blockchain contains:
A list of transactions — all Bitcoin transfers that occurred in that block.
The hash of the previous block — a unique code that identifies the block before it.
Its own hash — calculated based on the data in the block (transactions + the hash of the previous block).

A hash is a unique cryptographic value calculated from the content of the block (transactions) and the previous hash. It works like a digital fingerprint — even a tiny change in the block causes a completely different hash. Bitcoin uses SHA256 (Secure Hash Algorithm 256-bit), which means each hash always has 64 characters (256 bits), regardless of the size of the input text.

Example of an SHA256 hash for the word “Bitcoin”:

If we slightly changed the word bitcoin, for example by adding a space at the end, the hash would completely change.

What is important about hashing:
A hash cannot be reversed to reveal the original text. This means we cannot determine the original word from its hashed form.
The same input always produces the same output.
Two different input texts never produce the same hash.

Since each block contains the hash of the previous one, all blocks are interconnected.
So if anyone attempted to change a transaction in an older block, it would change the entire hash.
And because every following block contains the hash of the previous one, those blocks would instantly become invalid.

An attacker would have to modify all subsequent blocks, which is nearly impossible.
The reason is another groundbreaking technology — Proof of Work.