What Blockchains Do - dummies

By Tiana Laurence

A blockchain is a peer-to-peer system with no central authority managing data flow. One of the key ways to removing central control while maintaining data integrity is to have a large distributed network of independent users. This means that the computers that make up the network are in more than one location. These computers are often referred to as full nodes.

The figure shows a visualization of the structure of the Bitcoin blockchain network.

The structure of the Bitcoin blockchain network.

To prevent the network from being corrupted, not only are blockchains decentralized but they often also utilize a cryptocurrency. A cryptocurrency is a digital token that has a market value. Cryptocurrencies are traded on exchanges like stocks.

Cryptocurrencies work a little differently for each blockchain. Basically, the software pays the hardware to operate. The software is the blockchain protocol. Well-known blockchain protocols include Bitcoin, Ethereum, Ripple, Hyperledger, and Factom. The hardware consists of the full nodes that are securing the data in the network.