What Is a Blockchain Database?

The blockchain is the thing that ties bitcoin together. But how does it work?

Bitcoin is a decentralized technology, meaning that no one person controls it. This is great for people that don’t trust their banks, or bitcoin speculators for example, or simply people who prefer to take control of their finances themselves to help reduce their costs.

To make this work, bitcoin had to solve a big problem: it had to find a way for everyone in that decentralized network to agree who had sent bitcoins to whom, so that no one

could dispute it. That would prevent someone claiming to have sent money to someone else when they didn’t.

In short, bitcoin needed a general ledger, but it didn’t have a central place to store it. That’s where the blockchain comes in. But how does the blockchain work?

Inside the Blockchain

Bitcoin’s blockchain carries information about transactions on the bitcoin network. Every 10 minutes it adds information about the most recent transactions in the network. It does this in the form of a block of data, which is added to the end of the chain.

The first block in the blockchain, created when bitcoin first began, is the genesis block. It contains the first transactions that ever happened. The most recent block contains the transactions that happened during the last 10 minutes.

It is easy to find out which transactions happened in the last 10 minutes so that they can be written into the block. Whenever anyone makes a transaction with their bitcoin wallet, their wallet software broadcasts the transaction

to some of the other computers in the network. Those computers tell other computers, which then tell even more computers, and so on.

Avoiding Fraud

But what is to stop someone from going back and altering a block? Let’s say that you sold me some online music in exchange for bitcoins. If I send you the bitcoins using my software wallet, then the network sees that transaction, and relays it to you. Happy that you have been paid, you then send me my music, and everyone is happy.

But what if I am unscrupulous, and decide to reverse the transaction? What’s to stop me going back and altering the last block in the blockchain, deleting the transaction, so that the network has no record of me sending you any money?

To prevent this, bitcoin’s blockchain relies heavily on a particular branch of mathematics known as cryptography. It encodes information to make it secret, and enables people to prove that the information hasn’t been tampered with. That’s exactly what bitcoin needed to work.

Why Mining is Important for the Blockchain

Bitcoin does this using a process called mining, which helps to secure the blockchain. Miners are computers on the network that use their number-crunching power to secure the blocks in the blockchain, ensuring that no one else can tamper with them. Read about how mining works here.


The bitcoin general ledger is secured by this tightly-bound mathematical chain of blocks, and because all of the transactions that have ever happened in the network are stored in the chain, it is also extremely transparent.

There’s even an online tool called the blockchain explorer that lets you look inside the blockchain. You can search for bitcoin addresses, or for individual transactions – whether they belonged to you, or not.

Try doing that with your bank.

Leave a Reply

Your email address will not be published.