How Blockchain Works

A Deep Technical Dive into the Engine of Decentralization

Blockchain isn’t magic — it’s a brilliant combination of cryptography, distributed systems, and game theory. Let’s break down exactly how it works, step by step.

1. The Block Structure

Every block contains:

            // Block Header

            version: 4

            previousHash: "0000000000000abc..."

            merkleRoot: "1a2b3c4d..."

            timestamp: 1735683200

            bits: 386137931

            nonce: 2847329102

Block → [Header] + [Transactions] → Hash → Next Block

2. Cryptographic Hashing

SHA-256 produces a 256-bit (64-character) fingerprint:

            hash("hello world") → b94d27b9934d3e08...

            hash("hello world!") → a1b2c3d4e5f6...

Change one character → completely different hash. This is the foundation of immutability.

3. The Merkle Tree

All transactions are hashed and paired until one root hash remains:

Allows efficient verification of any transaction
SPV nodes only need the Merkle path
Enables light clients

4. Consensus: Proof of Work

Miners compete to find a nonce where:

SHA256(SHA256(block_header + nonce)) < target

Current difficulty: ~90 trillion hashes per block.

5. Network Propagation

When a block is found:

Miner broadcasts to peers
Peers validate and rebroadcast
~12.5 seconds global propagation
Longest chain wins

6. Fork Resolution

If two blocks are found simultaneously:

Nodes follow the first received
Other chain becomes "orphan"
Miners switch to longest chain
51% attack threshold

Blockchain is not just a database — it’s a state machine with cryptographic guarantees.

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