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Blockchain technology 101: How does the blockchain work?

If you’ve been investing in various cryptocurrencies like Bitcoin (BTC), Ethereum (ETH) or Dogecoin (DOGE), it’s almost impossible to not hear about blockchain technology. It is now considered to be one of the most prominent innovations of the 21st century, bridging the gaps between various industries like gaming, finance and social media. 

However, knowing its definition and how it operates can be a bit overwhelming, especially if you’re new to the term. You might even wonder how it gained so much traction compared to other internet technologies. To help you understand the growing interest behind blockchain, continue reading below to know how it works:

Blockchain technology explained

Also referred to as Distributed Ledger Technology (DLT), blockchain is an immutable ledger that controls the process of storing information that is impossible to hack, change or modify. The technology is best known for its vital contribution to digital currencies like Bitcoin since it maintains decentralised and secure data without the need for a middleman. 

Each block in the chain has several transactions. Every time a new one takes place in the network, a record of that certain transaction will be included in the ledger of participants. This means that it would be evident that someone tampered with the network if a block in the chain was changed. 

However, this has never happened before, which makes it highly difficult to achieve. What makes the blockchain difficult to tamper with is that miners should re-mine all the blocks if they want to make a change on a single block.

To help you understand it in simple terms, think of this analogy: 

  • When you create a new Google document, the document is distributed to a group of people instead of handing them out individual copies. This, in turn, gives everyone access to the document simultaneously. All changes are recorded and no participant is shut out while waiting for new changes from another user.

How does the blockchain work?

In the past years, you may have noticed that blockchain technology is now being integrated into various aspects and not just around digital assets. It is also now used for elections, storing medical records, cross-border payments and supply chain monitoring, among others. However, how does the blockchain work that makes it ideal for maintaining security and transparency in various industries? 

Take a look at the three most important concepts to help get you started:


Every chain in a network is made up of several blocks, and each block consists of three elements:

  • There is data stored in the block.
  • Each block contains a nonce which is a 32-bit whole number. It is randomly generated every time a block is formed, creating a block header hash.
  • Another element is the hash, a 256-bit number attached to the nonce. Since it is extremely small, it starts with several zeroes.

A nonce generates the cryptographic hash when the first block is formed. Unless it is mined, the data stored in the block is permanently tied to the nonce and hash. 


For a new block to be created on the chain, a process called mining takes place. Keep in mind that every block contains its own unique hash and nonce, along with referencing the hash of the previous block in the chain. This makes it harder for miners to mine a block, especially when it comes to big chains.

Through the use of expensive computers and tremendous amounts of electricity, miners are required to solve incredibly complex math problems to successfully add a block. They have to find a nonce that would generate a valid hash, which is also known as proof of work. 

Since the nonce is only 32 bits and the hash contains 256, approximately 4,000,000,000 possible nonce-hash combinations should be mined before a miner gets close to the correct one. Once a block is mined, the change is accepted and recorded by the nodes. Then the miner will receive a financial reward. However, this eventually becomes more difficult every time a new miner joins the network.


Every time the word blockchain comes up, the first thing that comes to mind is decentralisation. Its most significant feature is that no third party, organisation or computer holds the right to completely own the chain. Instead, what it uses is any kind of electronic device that stores copies of the blockchain, as well as keep the network fully operational. These are what you call nodes. 

Every node consists of a copy of the blockchain. Before the chain can be updated and trusted, the network should algorithmically verify or approve newly mined blocks. Thanks to the transparency of blockchain, the ledger can be easily accessed where you can see the records of every action. For instance, if you are a participant in the network, you will be granted a unique alphanumeric identification number to access your transactions.

There are two types of nodes: full and lightweight. The former is required to store all the blockchain transactions on their devices, validating blocks and transactions. Meanwhile, lightweight nodes only require minimal storage requirements since they only need block headers for verification. 

Learn more about the blockchain with Casino Days 

The potential growth of blockchain is improving exponentially, especially now that it has already reached different trades. From social networks to shared storage and better security, this technology is paving the way for new concepts to arise. This is especially true in the case of financial institutions since this helps them efficiently handle transactions such as settlement, insurance and loans.

Since blockchain technology is already making great contributions to gambling, welfare benefits and artist royalties, the digital world is preparing for its further development. That’s why professionals such as businessmen, trades-people and researchers need to learn about its ins and outs. Explore it further here at Casino Days!

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