Blockchain Explained: The Technology That Powers Bitcoin and More

Imagine a world where transactions don’t require banks, contracts execute themselves, and data can't be tampered with — no matter where in the world you are. This is the promise of blockchain technology.

Created to power Bitcoin, blockchain has evolved far beyond cryptocurrency. It’s now a foundational digital infrastructure driving innovation in finance, supply chains, healthcare, and even identity verification. At its core, blockchain offers a new way to store, secure, and share data — without relying on centralised institutions.

But what exactly is blockchain? And how does it work behind the buzzwords?

In this guide, we’ll break down how blockchain works, what makes it secure and unique, and why businesses across the globe are investing in blockchain-powered solutions. Whether you’re a curious consumer, a business leader, or just exploring the future of digital systems — this is your complete beginner-to-pro overview.

Let’s explore the technology powering Bitcoin — and everything beyond.

What Is Blockchain Technology?

A Beginner-Friendly Definition

At its simplest, blockchain is a type of digital ledger — a method for recording information that’s secure, transparent, and decentralised. Unlike traditional databases that store data in a central location (like a server), blockchain distributes the data across a network of computers. These computers (called nodes) all share the same data and constantly check to make sure it’s valid.

Once information is added to the blockchain, it becomes extremely difficult to change. That’s what makes it ideal for tracking digital transactions — whether that’s cryptocurrency, property records, digital identities, or supply chain data.

Distributed Ledger, Cryptographic Hashes, and Immutable Records

Three key components make blockchain revolutionary:

• Distributed Ledger: Instead of one central server, the same data exists simultaneously on thousands of nodes. Everyone in the network can access the ledger, but no one can tamper with it alone.

• Cryptographic Hashing: Every block (or record) contains a unique hash — a code generated from its data. If any information in the block changes, the hash changes too, alerting the system to tampering.

• Immutable Records: Once a block is verified and added to the chain, it’s locked in. No one can change or delete it without altering all subsequent blocks — a nearly impossible task on large networks.

The Role of Consensus Mechanisms (Proof of Work vs Proof of Stake)

Blockchain isn’t just about where the data is stored — it’s also about how new data gets added securely. That’s where consensus mechanisms come in:

• Proof of Work (PoW): Used by Bitcoin, this method requires miners to solve complex puzzles to validate transactions. It’s secure but energy-intensive.

• Proof of Stake (PoS): Used by newer blockchains like Ethereum 2.0, this model selects validators based on how much crypto they "stake" (lock up) as collateral. It’s faster and more eco-friendly.

Each method ensures trust in a decentralised system — without relying on banks, governments, or third parties.

How Blockchain Works — The Technical Process

Data Structures: Blocks, Chains, Hash Functions

A blockchain is built from a series of blocks — digital “containers” of data. Each block includes:

• Transaction data (e.g., sender, receiver, amount)

• A timestamp

• A cryptographic hash of the previous block

These blocks are linked chronologically. The hash from the previous block forms part of the next block’s identity. If someone tries to change one block, it breaks the chain, which alerts the entire network and prevents tampering.

This makes blockchain a linked, secure, and transparent data structure, ideal for environments where data integrity is crucial.

Validation Layers: Nodes, Miners, Validators Explained

Every blockchain runs on a network of participants, each playing a role:

• Nodes are computers that maintain a copy of the blockchain. Some are full nodes (which store the entire chain) and others are light nodes (which store only part of it).

• Miners (used in Proof of Work systems like Bitcoin) compete to solve mathematical puzzles. The winner adds the next block and earns a reward.

• Validators (used in Proof of Stake systems) are chosen to confirm transactions based on how much cryptocurrency they’ve staked as collateral.

Together, these participants form a decentralised trust system — no central authority, yet the data stays accurate and secure.

Smart Contracts: Self-Executing Logic on the Blockchain

One of blockchain’s most powerful innovations is the smart contract. These are pieces of code stored on the blockchain that execute automatically when certain conditions are met.

Example: If a buyer sends payment, a smart contract can instantly release ownership of a digital asset — no middleman needed.

Smart contracts make blockchain programmable — enabling everything from decentralised finance (DeFi) to automated insurance payouts, legal agreements, and token-based memberships.

Blockchain vs Traditional Infrastructure

Centralised vs Decentralised System Design

Most traditional digital systems are centralised — all data and decisions flow through a single authority, like a bank, a government, or a corporation. This setup makes things easier to manage, but also creates a single point of failure. If the central system is hacked, shut down, or corrupted, everything is at risk.

Blockchain, on the other hand, is decentralised. Data is not stored on one server, but distributed across a network of participants. Each node has equal authority and access to the information. This makes the system more resilient, transparent, and secure — especially in use cases where trust is hard to establish.

Security, Fault Tolerance, and Data Integrity

Blockchain security isn’t just about encryption — it’s about architecture. Because every block contains a hash of the previous one, any alteration would be immediately visible and rejected by the network.

This design provides:

• High fault tolerance – even if several nodes fail or go offline, the network remains operational.

• Data integrity – once a record is added to the blockchain, it’s nearly impossible to change.

• Auditability – every transaction can be traced, verified, and timestamped.

This is why blockchain is gaining popularity in sectors like finance, healthcare, and logistics, where tamper-proof records and high availability are critical.

When Blockchain Is (and Isn’t) the Right Solution

Blockchain isn’t a silver bullet. It works best when you need:

• Decentralisation

• Transparency

• Trust between unknown parties

• Immutable records

But if you're building a private system with clear authority, traditional databases are faster, cheaper, and easier to scale.

Use blockchain when trust is an issue — and data needs to be secure, transparent, and verifiable without intermediaries.

How Businesses Are Using Blockchain

Global Enterprises: Finance, Supply Chains, Logistics

Major companies across industries are already integrating blockchain to solve long-standing challenges. In finance, banks use blockchain to streamline payments, clear trades faster, and reduce fraud. For example, JPMorgan Chase developed its own blockchain-based platform, Onyx, to settle wholesale payments.

In supply chains, companies like Maersk and Walmart use blockchain to track goods from origin to shelf — improving transparency, reducing waste, and cutting costs. Each item gets a digital “passport” on the blockchain, allowing for real-time tracking and authentication.

Logistics providers like FedEx are exploring blockchain to automate documentation and improve shipment visibility across borders.

See how IBM and Maersk use blockchain in supply chain logistics

Consumer Use-Cases: Payments, Identity, Loyalty Programs

For consumers, blockchain is quietly improving everyday interactions:

• Digital payments with cryptocurrencies or stablecoins offer fast, low-cost alternatives to traditional banking — especially across borders.

• Digital identity projects are using blockchain to give people ownership of their credentials, without relying on governments or corporations.

• Loyalty and rewards programs are becoming smarter — blockchain allows users to earn and redeem points across multiple brands with less friction and more transparency.

One example is Singapore Airlines, which launched a blockchain-based loyalty wallet that lets customers use miles like cash across retail partners.

Explore the Singapore Airlines KrisPay blockchain rewards platform

Blockchain-as-a-Service (BaaS) and Scalable Integration

To make adoption easier, cloud giants like Amazon Web Services, Microsoft Azure, and Oracle offer Blockchain-as-a-Service (BaaS) platforms. These allow businesses to deploy blockchain applications without building the infrastructure themselves.

This has opened the door for small and medium businesses (SMEs) to explore blockchain-powered solutions — from document certification to anti-counterfeiting and digital asset tracking.

Read about AWS’s Blockchain offerings

Real-World Examples of Blockchain in Action

IBM, Maersk, De Beers, Unilever, and Beyond

Some of the world’s most recognisable brands are not just experimenting with blockchain — they’re implementing it at scale:

• IBM & Maersk: Their joint venture, TradeLens, used blockchain to digitise global shipping logistics, improving efficiency and reducing paper-based processes. Although the project was sunset in 2023, it paved the way for future supply chain solutions.

• De Beers: This diamond company uses a blockchain system called Tracr to verify the origin of each diamond. It ensures consumers receive conflict-free stones with a traceable digital trail.

• Unilever: The FMCG giant uses blockchain to monitor its palm oil supply chain, helping ensure ethical sourcing and sustainability.

• Provenance.org: A UK-based startup helping brands build transparent supply chains — using blockchain to track food, fashion, and beauty products from source to shelf.

Explore how De Beers uses blockchain to track diamonds

Government Use-Cases: Digital IDs, Registries, Procurement

Governments around the world are also testing and rolling out blockchain-based systems:

• Estonia: A pioneer in e-governance, Estonia uses blockchain to secure national registries like healthcare, identity, and even voting records.

• India: The state of Telangana uses blockchain to manage land records — reducing fraud and improving citizen access to title deeds.

• Dubai: With its “Blockchain Strategy 2025,” Dubai aims to move all government documents to blockchain platforms — enhancing transparency and cutting bureaucracy.

• UK Government Trials: HM Land Registry ran a trial using blockchain to streamline real estate transactions, showing promise for faster property transfers and fraud prevention.

Read about Estonia’s blockchain government infrastructure

Bonus: Blockchain for Creative Industries

From music royalties to digital art and publishing, creators are using blockchain to bypass traditional gatekeepers. Artists can mint their work as NFTs (non-fungible tokens), receive instant payments, and track ownership rights in real time.

Platforms like Audius and Async Art are decentralising music and art ownership — giving more control back to creators.

Learn about blockchain’s role in digital art from The Verge