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Blockchain explained in simple words.

vanessapc profile image Vanessa Rodriguez Cristobal ・3 min read

What is blockchain:

It’s a technology that allows peer to peer transfer of online assets without any central authority. It gained the trust of users by implementing software for verification of a group of transactions, validation of the individual transaction, and consensus of all the nodes (machines, people) behind it.

It abstracted to a layer of objectivity all the decision making that would go into a normal peer to peer transfer.

Where does the idea originate from?

The first paper was written about the decentralization of a system, in other words, the distribution of power over a grid  (of people of machines) as opposed to keeping the power of a system in a tight group of people or one person/machine.

The first practical or technically developed/implemented idea of this decentralization was the creation of BTC, by Satoshi Nakamoto (this/him/her being an unidentified person or group of people).

The first application of blockchain.

The first and to date, the most popular blockchains are the creation of BTC. The original date of release of the first block, also called, the genesis block, dates to ‘3/Jan/2009’ or so it’s believed, per the message left in the genesis block: ‘ The Times, 3/Jan/2009, Chancellor on brink…”.

BTC was written to become a peer to peer transfer of a digital asset, and that was and remains its main direction. Store and transfer asset/digital coins. BTC is a decentralized system, but an inflexible written blockchain that is done with one intended solely and that’s it’s main focus.

BTC was the first application of blockchain, and since, there has been an evolution in the creation and application of it. ETH became the most popular time example of what Blockchain could potentially serve in the future, enhancing and showing the potential of a Blockchain.

The structure of the blockchain.

These definitions should draw the basic structure of the elements and the basic elements needed to form a blockchain.

  • Transactions: the most basic element. Transactions are validated and broadcasted. A group of transactions forms a block.
  • Blocks: are groups of transactions that contain other data to be able to validate the information contained in the block. Several blocks create a chain through a digital data link.
  • Consensus process: the consensus process is what every block goes through to select the next block to be added. Once selected is verified and added to the chain.
  • Validation and consensus are both processed by other nodes (computers) in the blockchain running software specified by the blockchain protocol to validate a transaction, verify blocks and add blocks to the chain.


Ethereum as opposed to BTC is a programmable Blockchain.

This means that the ETH blockchain is made of all the basic elements explained above, just like BTC and other blockchains, but the way they are created thought and implemented it allows the user/s to create a transaction on the blockchain as complex or simple as they can imagine. Instead of working with an inflexible blockchain that essentially allows to store and transfer of assets, ETH Blockchain allows for the creation of and usage of applications of any type that run on top of the decentralized database which is its blockchain.

A simple way to illustrate this would be to say that BTC is the development of the close of a blockchain that mimics a bank. Whereas Ethereum’s blockchain is a server that belongs to none by everyone and has the capacity to, or exposes the opportunity of serving a virtual ‘bank’ or run a cryptocurrency as much as it does to serve another social network.

As long as someone wants to create it.

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