Step 1 – What is a blockchain?
A blockchain is a chain of digital blocks that stores data in a publicly visible ledger. The history of information and its validity is verified by Full Nodes (computers equipped with Bitcoin software) around the world, each of which maintains a complete copy of the blockchain’s history. Since transactions are secured by a “public” blockchain, there is no need to trust an intermediary (like a bank) to verify that your assets are real or that your transactions are not fraudulent. The only things you need to know are:
- Blockchain information is visible to all its users.
- Blockchain transactions are publicly confirmed.
- It is programmed and secured with mathematical formulas.
- A blockchain is a distributed ledger: a ledger that is stored, replicated, and maintained by multiple nodes (computers) rather than by a single central authority.
- It is append-only: once data (a transaction or record) is recorded, it cannot be altered or deleted (barring extreme consensus-level attacks).
- It uses cryptographic techniques (hash functions, signatures, merkle trees) to ensure data integrity, authenticity, and tamper resistance.
Blockchain is more than a buzzword — it’s becoming part of the infrastructure of finance, identity, supply chains, and more. As of mid-2025:
- Total value locked (TVL) across DeFi, staking, and protocols exceeds $2 trillion+ globally, indicating deep adoption.
- Many nations are piloting or launching central bank digital currencies (CBDCs) built on distributed ledger technology.
- Hybrid blockchain architectures (layer-1 + rollups + cross-chain messaging) are maturing, enabling scalable, interoperable systems.
In other words: to understand modern crypto, decentralized apps, tokenomics, and even web3 business models, you must first grasp what blockchain really is and what it can (and cannot) do.
- Each page of this notebook has a specific and limited capacity for writing information, similar to the pages of a regular paper notebook, which cannot contain more than a certain number of words per page.
- People can take turns adding a page filled with information to the notebook.
- The first page of this notebook is placed inside it by its creator and inventor himself.
- Each page has a number or code. For example, suppose the first page of this notebook has the number or code 2008.
- Each page has a timestamp (the date and time the page was successfully added to the notebook).
- The password for each page is converted into the password for the next page according to a formula or instruction (algorithm). Let’s assume the formula is: “Previous password multiplied by 2 and minus 1000.”
- Everyone can see the information recorded in this office.
- Anyone anywhere in the world can download and store a copy of all the pages of this notebook on their computer. These people voluntarily maintain the reproduced copies.
- Any new information recorded in this ledger is simultaneously recorded and updated in all replicated ledgers with the custodians.
- Anyone who wants to add a new page to this notebook must be able to calculate and prove their page number or code using the formula I mentioned before they are allowed to add a new page.
- This calculation is possible using the same mathematical formula and using the number or code of the first page (the same 2008).
- The authenticity of the information on each new page is verified by the majority of those present and overseeing the office.
- It is impossible to change the information recorded in this book. In other words, the recorded information and records are irreversible.
- People do not need to provide their name, surname, email, mobile number, or other identifying information to use this office, and they are only identifiable to others with a public key similar to a password (for example, bc1vb6c5b8xc4vb765xc3vbcx8v765), and therefore, people can remain anonymous as long as they want to preserve their privacy.
- Information transfer between people is done in a person-to-person (P2P) manner. This means that people do not need an intermediary person or organization to transfer information between each other. (I have given an example of this at the end of this step).
- Each person has a highly confidential digital signature called a private key , which is similar to a password. For example: 8rtt7v4pio8uy9u7rtwe574a54cz521vc2nm1bn26r5g (and much longer, of course!).
As you can see, blockchain is the result of the efforts of computer scientists, cryptographers, and mathematicians. I don’t want to complicate the subject for you, but to understand why so many people have trusted this technology since 2008, it’s better to continue this article patiently. Of course, you should know that the basic mechanism of a blockchain is much more complicated than the simple example you will see below.
We assumed that the first page number is 2008 .
If someone wants to add a second page to this notebook with the information they wrote on it, they must calculate the code for the second page. So, according to the formula I gave as an example earlier, they multiply 2008 by 2 (it becomes 4016) and then subtract 1000 (it becomes 3016 ). So this person writes the code 3016 on the second page and adds it to the notebook.
Another person, after writing some information on the third page, wants to add it to the notebook. So, according to the formula, he multiplies 3016 by 2 (it becomes 6032) and then subtracts 1000 (it becomes 5032 ). This person writes the code 5032 on the third page and adds it to the notebook. And this continues until anyone in the world can add a new page to this notebook.
This mechanism of calculating the password according to a formula, or so-called cryptography , makes it impossible for anyone to easily add a page to this ledger.
Finally, you should know that these pages are not stored in paper form but in computer files called blocks (pronounced: block). And since these blocks containing information are arranged in order and one after the other , like the pages of a book and like the links of a chain , the term block chain or blockchain is used for this type of book.
You may be wondering what information this book with this complex mechanism can be used to store. If we look again at the features of this book, we see that this type of book, or better said, blockchain , is suitable for recording information that we do not need to change, for example, recording information about financial transactions and money transfers between people in a bank or a country or around the world. When you yourself deposit an amount into someone’s account, this is a definitive transaction and transfer that can be recorded on the blockchain, and the information about this transaction (including the sender’s account number and the recipient’s account number, the amount and the time of the transaction) does not need to change in the future . So blockchain is a good place to store such information.
Or, for example, the date of birth of every human being, which will never change.
Of course, there is a problem with recording the date of birth: when a baby’s date of birth is recorded on the blockchain by an employee or nurse, it may be recorded a few days earlier or later, either by mistake or on purpose! This problem has not yet been solved in the world, and therefore, the use of blockchain is not currently recommended for recording information of this kind that requires high honesty or trust, or must ultimately be recorded by an intermediary.
- It is distributed and decentralized, with no central owner. This means that anyone can download and store all of its information on their computer.
- It is transparent.
- The information recorded in it cannot be manipulated/changed.
- It is unhackable, meaning it cannot be cheated.
- Protects people’s privacy.
- Information transfer is fast.
- Transaction costs are very low, and in some blockchains, they are close to zero dollars.
- Identity theft is not possible there.
- It can be used globally (with just a simple internet connection).
- Inflation and uncontrolled money creation are controllable.
- Globalization makes business easier.
- The data stored in it cannot be lost, corrupted, deleted, stolen, censored, or hacked.
- It has the ability to implement smart contracts or self – executing contracts .
- It has the ability to launch private blockchains for governments or organizations.
- Nodes & Decentralization Every full node keeps a complete copy of the blockchain’s history. They validate new blocks and enforce protocol rules.
- Consensus Mechanisms
- Proof of Stake (PoS) and its variants dominate. Validators stake native tokens to secure the network.
- Hybrid / modular systems: Some chains delegate consensus to a low-level chain and computation to rollups or sidechains.
- Finality gadgets / BFT consensus / Tendermint / HotStuff: Many blockchains adopt these oracles to improve deterministic finality.
- Blocks, Chains & Hashing Each block holds a batch of transactions, a timestamp, a bit of metadata, and a cryptographic link (hash) to the previous block — forming an unbroken chain.
- Smart Contracts & Programmability Blockchains like Ethereum, Solana, Aptos, Sui, and others allow developers to deploy programs (smart contracts) that run deterministically across nodes.
- Scalability / Layer-2 / Sharding
- Sharding splits blockchain state across partitions to increase throughput.
- Layer-2 protocols (optimistic rollups, zk-rollups, validiums) offload computation while preserving security from the base layer.
- Cross-chain protocols (e.g. Axelar, LayerZero, Wormhole) let you move tokens/data between blockchains.
- Interoperability & Messaging Modern blockchains use secure cross-chain messaging protocols to interact and share data, rather than relying purely on bridges (which are high-risk).
- Immutability & Finality Once a block is finalized, it is considered immutable. Some chains use checkpointing or finality layers to guard against deep reorgs.
As we have learned so far, this book can act like a ledger to record information about financial transactions. On the other hand, because this book or database is shared and accessible to everyone and can be distributed, maintained and hosted among different computers, it is also called a distributed ledger . Distributed Ledger Technology (DLT) is the foundation of blockchain.
Like you, when I first came across these two words, my first thought was that it was probably the name of a Japanese person or company. Blockchain was originally designed and defined in 2008 by them.
In 2008, a genius named Satoshi Nakamoto officially invented Bitcoin and published its white paper on January 3, 2009. In fact, the first Bitcoin was mined on January 3, 2009 by someone with the pseudonym Satoshi Nakamoto .
Whoever this mysterious person or group with the pseudonym Satoshi Nakamoto was, managed to create the world’s first cryptocurrency that would soon change everything as we know it today.
Bitcoin is the product of blockchain and allows us to send money to anyone, anywhere in the world, without the need for intermediaries.
Why was Bitcoin created?
Bitcoin was inspired by the Great Financial Crisis, which showed that even the world’s largest banks could fail. It highlighted the fragility of the modern financial system and called for the decentralization of financial transactions.
Bitcoin is not intended to do anything groundbreaking – it is an improved alternative to the existing unfair, inaccessible, and inflationary financial system. By decentralizing finance, Bitcoin has gradually simplified a complex system to the point where it has connected nearly two billion people around the world, transforming the blockchain into a permissionless network that anyone can be a part of.
Bitcoin remains open source, meaning that no one has the power to own or fully control it. Its design is public and free for everyone to use.
Possible identities of Satoshi Nakamoto
Dorian Nakamoto
Craig Wright
Hal Finney
Nick Sabo
Dorian Nakamoto
In 2014, Newsweek attempted to reveal Nakamoto’s identity, identifying Dorian Nakamoto as the elusive creator of Bitcoin. But he denied any connection to Bitcoin. He dismissed any published quotes as a misinterpretation by the reporter.
Greg Wright
In 2016, Australian computer scientist Craig Wright claimed to be the man behind the pseudonym. The evidence included an article about cryptocurrencies that was supposedly published on Wright’s blog a few months before the release of the Bitcoin white paper. But evidence has emerged to prove otherwise.
The blog entries, like the supposed public encryption keys associated with Nakamoto, had an earlier date.
Nick Sabos
A professional computer engineer, cryptocurrency expert, Nick Szabo was also one of the headlines.
“Satoshi Suspect.”
A cryptographer and legal researcher who has published works that have been linked to Satoshi Nakamoto in a coordinated manner. Szabo denied the allegations of his secret identity.
Hal Finney
A computer scientist, coder, and crypto enthusiast even before the Bitcoin boom.
He is reported to be the first person to work on debugging and improving the Bitcoin Open Source Initiative (BIP) code.
He also received the first Bitcoin transaction from Satoshi Nakamoto in 2009.
He denied such claims and provided evidence to prove that he was not Satoshi Nakamoto (emails exchanged between him and Nakamoto).
Who is next?
What do you think?
Now we realize that the first application defined for blockchain technology, or the distributed ledger, was not to record the birth dates of people in the world, but to record the balance, transfers, and transactions of an online currency called Bitcoin . On the other hand, we have forgotten that in blockchain, information is transferred between people on a person-to-person basis. That is, people do not need an intermediary person or organization (such as a bank) to transfer information between each other.
Let’s say your Bitcoin holdings on the blockchain are 10 Bitcoins registered in your name (remember: your name on the blockchain is something like this public key or password ):
bc1vb6c5b8xc4vb765xc3vbcx8v765
On the other hand, suppose your friend’s public key is also bc1875p4s421x3a5w98tu7ty7oui8p and your friend doesn’t have any Bitcoin. If you decide to transfer 2 Bitcoins to your friend, you would do this:
- You open the relevant software or application or app .
- You will go to the submission section .
- You enter your friend’s public key in the recipient field.
- You set the amount or number to be equal to 2 Bitcoins.
- You sign this document with your digital signature .
- You send the signed document to the blockchain to be recorded on the blockchain .
- You also pay the cost, or rather, the fee, of this registration.
- You are waiting for the registration of this document to be confirmed and announced.
After confirming the registration of this transaction in the blockchain (distributed ledger), the number of bitcoins connected to your public key will be 8 bitcoins, and the number of bitcoins connected to your friend’s public key will be shown as 2 bitcoins, and that’s it!
If you look closely, you will see that you did not need a bank or institution or company or any other person to make this transfer between you and your friend , and you directly signed the document of this transfer to be recorded in the blockchain. This type of information transfer between people, which is done without an intermediary, is called peer-to-peer or peer-to-peer or person-to-person or computer-to-computer ( P2P ).
Let’s say Alice wants to send 3 units of Token X to Bob.
- Alice creates a transaction with Bob’s public address, amount, and optionally some data (e.g. a memo or contract call).
- She signs it using her private key (asymmetric cryptography).
- She broadcasts the signed transaction to the network.
- Validators pick up that transaction, group it into a candidate block, and run consensus to include it.
- Once consensus is reached, the block gets added to the chain.
- After finality — which might be instantaneous or take several confirmations, depending on the chain — Bob’s balance increases by 3, and Alice’s decreases.
In modern blockchains, the above process is enhanced:
There are clusters serving the blockchain that use the processing power of ASICs and computers connected to that cluster to perform calculations to verify newly found blocks. These clusters are called pools, and the work they do is called cryptocurrency mining! or mining.
Obviously, as the number of blocks in the blockchain increases over time, the volume of blockchain information increases, and the calculation of hashes and related confirmations becomes more difficult and time-consuming, to the extent that the number and power of mobile processors, home computers or laptops, and even servers may not be able to handle the optimal processing required. In this case, special devices are produced that are used only to solve the blockchain formula and problem. These devices, which are called ASICs (Application-Specific Integrated Circuits – ASIC ) for short, are made from a set of ICs ( Integrated Circuits ) for this purpose.
Individuals who voluntarily purchase ASIC devices and help the network process by connecting to one of the pools (via the Internet) receive a reward from that pool and, in fact, from the blockchain in exchange for this help (and electricity consumption, Internet bandwidth consumption, etc.). The type and amount of this reward varies according to the definitions, agreements, rules, and protocols of each blockchain, but usually users receive their reward in the form of a digital currency (for example, Bitcoin or Ethereum or …) in a special electronic wallet software or app (Wallet). This method of obtaining rewards is similar to mining gold from a mine, in which a miner works hard and receives a reward of a portion and percentage of the gold found. Therefore, this method of obtaining digital currency is called digital currency mining.
- Ask LLMs to explain protocols: Example prompt: “Explain how Ethereum sharding works in the post-Merge era, including beacon chain and shard committees.”
- Compare blockchains side by side: Prompt: “Compare Solana (PoH + PoS) vs Ethereum 2.0 regarding transaction throughput, decentralization, and security tradeoffs.” Tools: Gamma, DiagramGPT, Lucidchart with AI, Notion AI (for block diagrams or consensus flow).
- Generate diagrams & visuals: Use an AI diagram generator to draw block structure, node topology, or merkle trees to embed in your learning modules.
- Summarize whitepapers / research: Feed a blockchain or protocol whitepaper into ChatGPT Advanced Data Analysis or Claude to extract key concepts, consensus methods, or vulnerabilities.
- Quantum Resistance / Post-Quantum Cryptography (PQC)
Many blockchains currently use ECDSA / secp256k1 elliptic curve signatures, which could be vulnerable to quantum attacks. Leading projects are exploring hybrid signature schemes or fully post-quantum curves for future-proofing. - 51% / Majority Attack
Even PoS systems can be vulnerable if a single entity controls >50% of stake or voting power. Decentralization and stake distribution are critical. - Bridge / Cross-chain Risks
Bridges remain a major vulnerability — faulty contracts, oracle manipulation, or compromised validators can lead to massive exploits. - Smart Contract Bugs & Formal Verification
Use static analyzers (Slither, MythX), formal verification (Coq, Certora), or third-party audits to ensure correctness, particularly for financial logic. - Sybil / Node Censorship / Centralization Pressure
High node costs, resource centralization (e.g. data centers), or governance concentration can erode decentralization.
Q: Is blockchain just a decentralized database?
A: Yes and no. It is a distributed ledger (a type of database) but with cryptographic guarantees, consensus, immutability, and decentralized trust. It’s more secure but also more constrained than a conventional DB.
Q: Can someone change data already recorded on the blockchain?
A: In theory, with enough control over consensus, yes (e.g. 51% attack). But in practice, well-secured, high-stakes chains make this exceedingly expensive or impractical.
Q: Why not record everything (images, videos) on the blockchain?
A: Blockchains are inefficient for large data. Usually, large files are offloaded (IPFS, Arweave) and only cryptographic hashes or pointers are stored on-chain.
Q: Is blockchain anonymous?
A: Not strictly. Transactions are pseudonymous: you see public keys, not names. Unless additional privacy layers (zk proofs, mixers, MPC) are used, identities may link through analytics.
Q: What’s the difference between blockchain and DLT (Distributed Ledger Technology)?
A: “DLT” is a broader term: any system where ledger data is distributed across nodes (not necessarily chained blocks or using cryptographic linking). Blockchain is a subset of DLT.
Q: Do all blockchains use mining?
A: No. Many modern chains use Proof of Stake or other non-mining consensus methods. Mining (Proof of Work) is largely phased out in major chains due to energy cost inefficiency.
Q: Is blockchain an operating system (OS)?
A: Yes and no. The Bitcoin blockchain is not an operating system—it was designed solely for peer-to-peer digital currency transactions. However, with the emergence of Ethereum, blockchain technology evolved to support decentralized applications (DApps). Ethereum introduced a programmable layer through smart contracts, making it functionally similar to an OS for decentralized computing.
