Ethereum: A Simple Explanation of How Blockchain Works
Imagine you’re at a party and you want to give some cool things to your friends as a thank you for coming. You could just give them cash or physical gifts, but that’s not very efficient, right? What if everyone had a copy of the list of what everyone wants, so they can all agree on who gets what?
That’s basically what blockchain is: a digital ledger (a list) that keeps track of transactions (what people want and give to each other). But Instead of Using Cash Or Physical Gifts, It Uses Special Computer Codes Called “Blockchain” to Record Everything.
Here’s How It Works:
1. A Group of People AGRE ON THE Rules
A Group of Individuals, Called Miners, Work Together to Create A New “Block” (A Collection of Transactions). They use powerful computers to solve complex math problems, which helps verify that the block is valid. This ensures that only one person can add new blocks to the ledger at a time.
2. A Transaction is recorded in The Blockchain
The Miner Collects A Group of Transactions from All the People Who Participated In The Party (I.E., They Want To Sleep Something or Receive Something). They then combines these transactions into a single block and adds it to the ledger.
3. The Block is Verified by Miners
The Miner’s Computers Check the Block for Any Errors or Duplicates, Ensuring That The New Transaction is Valid. If Everything Looks Good, The Miner Broadcasts The New Block On The Network.
4. Everyone can see the blockchain
Once a New Block is added to the ledger, it’s visible to all participants. This allows anyone to trust that everyone has an accurate copy of the list (The Blockchain).
5. Miners Get Rewards For Their Work
Miners are rewarded with newly Touch Ethereum tokens (E Ether) for Solving the Complex Math Problems and Verifying the Blocks. The More Blocks They Solve, the More and Ether They Earn!
How it works in practice:
- When you send some Ethereum to Someone, it’s added to a new block on the blockchain.
- The Blockchain is then Broadcast to the Entire Network of Miners.
- Miners Verify the transaction and add it to their copy of the ledger (blockchain).
- Everyone can see the updated blockchain, which everyone has an accurate list.
In Simple Terms, Ethereum Uses Blockchain Technology to Create A Secure, Transparent, And Tamper-proof Record Book for All Transactions. The decentralized nature of blockchain allows for peer-to-peer transactions without the need for intermediaries like banks or governments.
While this explanation might have tasks some time to grasp, I help it is helped you understand how ethereum works!