How Blockchain Works in Simple Terms

Bitcoin is quite the buzz word right now. Everyone wants a piece of bitcoin. It just keeps growing!

But for the average person, bitcoin doesn’t make sense. How does something that is made up of ones and zeros have any sort of value? What happened to being backed by good old fashioned gold?

To understand this, we have to dig deeper to understand the underlying foundation of digital currency: the blockchain.

Blockchain in Food Safety

Let’s say you’re a farmer who sells chocolate milk from your chocolate cows. Every time you sell your chocolate milk, it gets packaged up in special sealed containers and scanned at your farm.

This initial scan is then recorded at your farm and sent to the distribution center and the grocery stores your precious cargo will pass through.

At the distribution center, the sealed containers are scanned and the location and status is recorded at the center. This information is also sent to the grocery stores and your farm to be recorded as well.

Anything that happens to these containers in transit is recorded and the information sent to the grocery stores, the distribution center, and your farm.

This is the block chain in one of its simplest forms.

The block chain is a set of information that isn’t stored on any one server, but is stored throughout an entire network. In this case, everything that happens to the containers of chocolate milk deliciousness is recorded separately at all three facilities.

Then, God forbid, if anything happens to the milk, the event is able to be located on the transportation timeline. And not only that, but it can be verified by the other facilities by looking at all copies of the block chain. Then, if any copy of the block chain is tampered with, the information can be checked and verified by the other facilities.

Now, let’s say there is a listeria outbreak after many customers have purchased your chocolate milk. Officials can trace back the path of the chocolate milk through transit and find out what happened.

If there is no issues recorded by each containers through transit, they’ll likely show up on your farm and require a thorough cleaning as well as a confiscation of the chocolate milk.


Now, if instead there was someone that tampered with the containers while on the truck, each container would record this and officials could determine when the contamination occurred.

Or maybe containers were damaged at the distribution center.

If the manager didn’t want the responsibility of lost product, he could hypothetically change the center’s copy of the block chain to show no issues.

And that’s the beauty of the block chain, the damaged containers could be verified by looking at the information recorded at the grocery store and the farm.

The Blockchain in Cryptocurrency

The block chain makes many industries more secure, including the financial space. As I’ve mentioned, the block chain is the foundation of bitcoin.

This blockchain is stored individually on computers across the world that verify transactions of bitcoin. Whenever a bitcoin is transacted, these computers verify it through the network before the transaction can be complete.

When the transaction is complete, it is added as a “block” or a section of a block to the chain of transactions stored on each computer in the network. This reduces the chance of issues arising within the block chain. If any one computer is compromised or there is an issue with the record, it can be corrected by referencing the rest of the computers in the network.

Thus, no one can tamper with the block chain because no single person or company has access to all of the computers in the network.

Another benefit of Bitcoin’s blockchain is that it is completely transparent as a public record. Anyone can access all the information in the blockchain. This isn’t to say people’s personal information is compromised, just that each transaction can be viewed if someone has the desire.

Now you know the basics of blockchain.

So I’m curious: are you comfortable with putting some of your money into Bitcoin after learning a bit more about how it’s run? Do you own any Bitcoin right now?

I’d love to hear from you in the comments down below!

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