What Is Blockchain? Fundamentals Essential Best Guide

What Is Blockchain

What Is Blockchain? Fundamentals Essential Best Guide

Table of Contents

With the emergence of the internet, many technologies are entering the world with each passing year. Blockchain is one such technology that has an impeccable impact on the digital world.

But there are still some people who are unaware of this technology. That’s why the internet is full of searches like What Is Blockchain?

As blockchain technology continues to evolve, it becomes quite important to learn and understand it to prepare for the future.

So, if you want to learn and understand this emerging technology, keep reading this complete guide. In this article, we will cover key topics, including what is blockchain, how it works, etc.

What Is Blockchain Technology?

Blockchain is a technology that keeps transactional records of the public in various databases through a network of peer-to-peer nodes (a group of individual computers).

This type of storage is sometimes referred to as a ‘digital ledger.’ Every transaction in this ledger is authorized with the owner’s digital signature, which verifies the transaction and protects it from manipulation.

What Is Blockchain Technology

As a result, the data in the digital ledger is extremely safe. Cryptocurrency transactions, NFT ownership, and DeFi smart contracts can all be recorded on a blockchain.

On the other hand, blockchain networks are a type of distributed ledger technology (DLT), which means their transactions are recorded with a secured cryptographic signature called Hash.

While any traditional database can hold this type of data, what makes a blockchain network stands out is its decentralized nature.

After moving forward from the topic – What is blockchain? Let’s discuss how does it actually work?

How Does Blockchain Works?

Blockchain networks allow people to share valuable data in the most tamperproof and safe way possible.

As new data is periodically updated to the network, it creates a new block that attaches to the “chain.” This entails all nodes continuing to update their version of the blockchain network to be similar.

Blockchain technology is based on three major concepts: Blocks, Miners, and Nodes.


Every blockchain technology consists of several blocks, and each block has three main elements: Data, Nonce, and Hash.


Miners mine and create new blocks on the blockchain. They use special softwares and heavy machines to solve the complex mathematical puzzle to mine blocks.

When miners successfully mine a block, they get a financial reward.


Decentralization is the main feature of blockchain technology. It means no computer or organization can own or edit the chain.

Instead, it is a distributed ledger via nodes (groups of computers) connected to the chains.

What Are The Types of Blockchain Technology?

After understanding – What Is Blockchain? Let’s discuss the different types of blockchain technology.

Majorly, there are four types of blockchain technologies: Public blockchain networks, Private blockchain networks, Consortium blockchains, and Permissioned blockchain networks.

So, let’s take a closer look at each type of blockchain technology:

Public Blockchain Networks:

These blockchain networks allow everyone to join and participate. These majorly include cryptocurrencies such as the bitcoin blockchain or ethereum blockchain.

This blockchain network eliminated key issues such as centralization and a few security flaws. In this, data is distributed across the P2P network rather than stored in a single place.

The network uses the two most powerful consensus algorithms: Proof of Stake (PoS) and Proof of Work (PoW).

Private Blockchain Network:

Private blockchains function well for private enterprises and organizations as they run on closed networks.

These networks allow businesses to define their access and authorization choices, network characteristics, and other essential security features.

On the other hand, a single authority manages a private blockchain network.

Permissioned Blockchain Network:

Permissioned blockchain networks, also known as hybrid blockchains, are private blockchains that grant privileged access to approved persons.

Organizations generally build up these sorts of blockchains to get the best of both worlds. Additionally, it allows for greater structure when determining who may engage in the network and what transactions they can do.

Consortium Blockchains:

Consortium blockchains, like permissioned blockchains, feature both public and private components. However, numerous companies manage a single consortium blockchain network.

Although these blockchains are more difficult to set up at first, once they are up and running, they can provide more security.

Furthermore, consortium blockchains are ideal for multi-organization collaboration.

What Are The Advantages and Disadvantages of Blockchain Technology?

What Are The Advantages and Disadvantages of Blockchain Technology

As blockchain technology is largely adopted by organizations and individuals, there are some advantages and disadvantages of this network that every individual must be aware of:


Highly Accurate:

This can decrease mistakes as a blockchain transaction must be confirmed by many nodes. If one node has a database issue, the others will notice the difference and catch the fault.

Furthermore, each asset is uniquely identifiable and recorded on the blockchain ledger, eliminating the possibility of double-spending.

No Need for Intermediaries:

Two parties in a transaction can use blockchain to confirm and finish a transaction without the need for a third party. This saves time and money by eliminating the need for an intermediary such as a bank.

Highly Secured:

A decentralized network, such as a blockchain, theoretically makes it almost difficult for someone to commit fraud. They’d have to hack every node and modify every ledger to insert bogus transactions.

While this isn’t impossible, many cryptocurrency blockchain systems utilize proof-of-stake or proof-of-work transaction verification procedures that make adding fraudulent transactions difficult.

Quick Transfers:

As the blockchain platform operates 24/7, it makes the transfers quick and even more effective, especially international transfers.

It doesn’t need any central authority to validate transactions manually.

More Efficient:

As the distributed ledger shares between the network members, it eliminates the time-wasting record reconciliations.

Additionally, a set of rules such as Smart contracts can be stored on the blockchain to speed up the transactions.


Limit on Transaction Speed:

As a blockchain database depends on a large network to approve the transactions, it limits the speed of transactions.

For instance, Visa can process up to 1700 transactions per second in comparison to bitcoins’ 4.6 transactions per second.

High Energy Cost:

It costs substantially more energy to have all of the nodes validate financial transactions than it does to have a single database or spreadsheet.

This not only raises the cost of blockchain transactions but also adds a significant carbon footprint to the environment.

Possibility of Asset Loss:

Cryptographic keys help to safeguard some digital assets, such as cryptocurrencies in a blockchain wallet. This key must be safely stored.

Possibility of Illegal Activity:

The decentralization of blockchain gives additional anonymity and secrecy, which makes it tempting to criminals.

Illicit transactions on the blockchain are more difficult to monitor than bank transactions, linked to a person’s name.

How Is Blockchain Being Used?

Today, there are wide usages of blockchain technology, from offering financial services to cryptocurrencies.


The most common and popular use of blockchain is its cryptocurrencies, such as Bitcoins, Ethereum, Litecoins, etc.

The transaction gets recorded on the blockchain system whenever an investor buys or sells cryptocurrency. The technology continues to widen with its worldwide adoption.


Besides cryptocurrencies, banking institutions use blockchain technology to process transactions in fiat currencies, such as USD and EURO.

Unlike institutions, blockchain allows faster and more secure transfer of funds.

Asset Transfer:

Today, anyone can use the blockchain to transfer the ownership of assets, especially Non-Fungible Tokens (NFTs). Additionally, you can use it to transfer the ownership of real-time assets.

Supply Chain Monitoring:

Supply chains own huge data related to where goods transfer from one place to another with traditional storage data; it becomes hard to track the problem. However, blockchains monitor the supply chain more efficiently.

How To Invest In Blockchain?

In this part of the article – What Is Blockchain? Let’s talk about how you can invest in blockchain.

You might have heard of investing in blockchain, but in reality, you can’t directly invest in blockchain. It is not an asset but a system or technology to store and process transactions.

However, you can invest in assets or organizations using blockchain technology. The easiest and most popular way is to invest in cryptocurrencies that run on the blockchain.

The second way is to invest in blockchain companies as you may gain exposure to blockchain technology in your portfolio.

The last and most efficient way is to buy exchange-traded funds (ETFs) that invest in blockchain companies and assets.

The Bottom Line:

As we came to the end of the topic – What is blockchain, we hope you have fully understood this technology precisely.

In this article, we covered some of the key topics related to blockchain technology. And of course, how can you invest in it?

So, now that you have learned about blockchains, if you want to invest in these emerging technologies, the best way to do this is to invest in cryptocurrencies.

Looking to invest in cryptocurrencies, start now with InvestBy – a reliable brokerage platform.


Who Invented Blockchain and What is Blockchain?

Blockchain technology was invented by the unknown persons behind the online cash currency bitcoin under the pseudonym of Satoshi Nakamoto.

Blockchain is a technology that keeps transactional records of the public in various databases through a network of peer-to-peer nodes (a group of individual computers).

Can I Buy Blockchain Stock?

You can buy blockchain stocks via online brokerage platforms such as InvestBy.

Can I Invest In Blockchain?

You can’t directly invest in blockchain; instead, you can invest in assets or companies using blockchain technology.

Is Blockchain the Future?

According to the experts, blockchain will be the future due to its widespread usage.

What Is The Best Blockchain?

Ethereum is the best and most secure blockchain-based cryptocurrency platform.

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