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Before we get started let us remove your few myths all about Blockchain. Blockchain is not a bitcoin but it is a technology behind the bitcoin. Hence Bitcoin is the digital token and blockchain is the ledger technology to keep track of bitcoin data. So you can’t have bitcoin without blockchain but you can have a blockchain without bitcoins.

Blockchain Architecture

Now let’s understand the behind the process of how blockchain works step by step.

A Block

A blockchain is nothing but a chain of one or more numbers of blocks in which all the information is stored in it. For example, in blockchain a bitcoin block stores the data about sender, receiver and the number of bitcoins to be transferred. Also to keep in note that the first block is called Genesis Block and all other blocks keep getting connected behind it.

Contents of a Block

Each block has

  • A-Data
  • A Hash and
  • Hash of the previous block.

Understanding SHA256- Hash

Each block has a hash which is like a fingerprint and its always unique just like a fingerprint. It helps miners to identify a block and all of its contents. So once the block is created and any changes are done in a block then it leads to change the Hash identity.

For example, we have a chain of 3 blocks, while the first block has no previous data stored in it. The block 2 contains the hash of the first block and the block 3 contains the hash of 2nd block. So these techniques make blockchain much secure.

Proof Of Work

Hashes are an excellent mechanism to prevent tempering but computers these days are high-speed and can calculate hundreds of thousands of hashes per second. In a matter of a few minutes, an attacker can tamper with a block, and then recalculate all the hashes of other blocks to make the blockchain valid again.

To avoid the issue, blockchains use the concept of Proof-of-Work. It is a mechanism which slows down the creation of the new blocks.

A proof-of-work is a computational problem that takes certain to effort to solve. But the time required to verify the results of the computational problem is very less compared to the effort it takes to solve the computational problem itself.

In the case of Bitcoin, it takes almost 10 minutes to calculate the required proof-of-work to add a new block to the chain. Considering our example, if a hacker would to change data in Block 2, he would need to perform proof of work (which would take 10 minutes) and only then make changes in Block 3 and all the succeeding blocks.

This kind of machine makes it quite tough to tamper with the blocks so even if you tamper with even a single block, you will need to recalculate the proof-of-work for all the following blocks. Thus, hashing and proof-of-work mechanism make a blockchain secure.

Distributed P2P Network

However, there is one more method which is used by blockchains to secure themselves, and that’s by being distributed. Instead of using a central entity to manage the chain, Blockchains use a distributed peer-peer network, and everyone is allowed to join. When someone enters this network, he will get the full copy of the blockchain. Each computer is called a node.

Let’s see what happens when any user creates a new block. This new block is sent to all the users on the network. Each node needs to verify the block to make sure that it hasn’t been altered. After complete checking, each node adds this block to their blockchain.

All these nodes in this network create a consensus. They agree about what blocks are valid and which are not. Nodes in the network will reject blocks that are tampered with.

So, to successfully tamper with a blockchain

  • You will need to tamper with all blocks on the chain
  • Redo the proof-of-work for each block
  • Take control of greater than 50% of the peer-to-peer network.

After doing all these, your tampered block become accepted by everyone else. This is next to an impossible task. Hence, Blockchains are so secure.

How Blockchain Transaction Works?

Step 1. Some person requests a transaction. The transaction could be involved cryptocurrency, contracts, records or other information.

Step 2. The requested transaction is broadcasted to a P2P network with the help of nodes.

Step 3. The network of nodes validates the transaction and the user’s status with the help of known algorithms.

Step 4. Once the transaction is complete the new block is then added to the existing blockchain. In such a way that is permanent and unalterable.

Why do we need Blockchain?

Here, are some reasons why Blockchain technology has become so popular.

Resilience: Blockchains is often replicated architecture. The chain is still operated by most nodes in the event of a massive attack against the system.

Time reduction: In the financial industry, blockchain can play a vital role by allowing the quicker settlement of trades as it does not need a lengthy process of verification, settlement, and clearance because a single version of agreed-upon data of the shared ledger is available between all stack holders.

Reliability: Blockchain certifies and verifies the identities of the interested parties. This removes double records, reducing rates and accelerates transactions.

Unchangeable transactions: By registering transactions in chronological order, Blockchain certifies the unalterability, of all operations which means when any new block has been added to the chain of ledgers, it cannot be removed or modified.

Fraud prevention: The concepts of shared information and consensus prevent possible losses due to fraud or embezzlement. In logistics-based industries, blockchain as a monitoring mechanism act to reduce costs.

Security: Attacking a traditional database is the bringing down of a specific target. With the help of Distributed Ledger Technology, each party holds a copy of the original chain, so the system remains operative, even the large number of other nodes fall.

Transparency: Changes to public blockchains are publicly viewable to everyone. This offers greater transparency, and all transactions are immutable.

Collaboration – Allows parties to transact directly with each other without the need for mediating third parties.

Decentralized: There are standards rules on how every node exchanges the blockchain information. This method ensures that all transactions are validated, and all valid transactions are added one by one.

Blockchain versions

Blockchain 1.0: Currency

The implementation of DLT (distributed ledger technology) led to its first and obvious application: cryptocurrencies. This allows financial transactions based on blockchain technology. It is used in currency and payments. Bitcoin is the most prominent example in this segment.

Blockchain 2.0: Smart Contracts

The new key concepts are Smart Contracts, small computer programs that “live” in the blockchain. They are free computer programs that execute automatically and check conditions defined earlier like facilitation, verification or enforcement. It is used as a replacement for traditional contracts.

Blockchain 3.0: DApps:

DApps is an abbreviation of decentralized application. It has their backend code running on a decentralized peer-to-peer network. A DApp can have frontend code and user interfaces written in any language that can make a call to its backend, like traditional Apps.

Blockchain Variants


In this type of blockchains, ledgers are visible to everyone on the internet. It allows anyone to verify and add a block of transactions to the blockchain. Public networks have incentives for people to join and free for use. Anyone can use a public blockchain network.


The private blockchain is within a single organization. It allows only specific people of the organization to verify and add transaction blocks. However, everyone on the internet is generally allowed to view.


In this Blockchain variant, only a group of organizations can verify and add transactions. Here, the ledger can be open or restricted to select groups. Consortium blockchain is used cross-organizations. It is only controlled by pre-authorized nodes.

Blockchain Use Cases

Blockchain Technology is used widely in the different sectors as given in the following table.




  • Billing, monitoring and Data Transfer
  • Quota management in the Supply Chain Network

Government Sector

  • Transnational personalized governance services
  • Voting, propositions P2P bond,
  • Digitization of documents/ contracts and proof of ownership for transfers
  • Registry & Identify
  • Tele-attorney service
  • IP registration and exchange
  • Tax receipts Notary service and document registry


  • Agricultural & drone sensor networks
  • Smart home networks
  • Integrated smartcity.
  • Smart home sensors
  • Self-driving car
  • Personalized robots, robotic component
  • Personalized drones
  • Digital Assistants


  • Data management
  • Universal EMR Health databanks
  • QS Data Commons
  • Big health data stream analytes
  • Digital health wallet Smart property
  • Health Token
  • Personal development contracts

Science & Art

  • Supercomputing
  • Crowd analysis
  • P2P resources
  • Digital mind fit services

Finance & Accounting

  • Digital Currency Payment
  • Payments & Remittance
  • Decartelized Capital markets using a network of the computer on the Blockchain
  • Inter-divisional accounting
  • Clearing & Trading & Derivatives
  • Bookkeeping

Important Real-Life Use Cases of Blockchain

Dubai: The Smart City

In the year 2016, smart Dubai office introduced the Blockchain strategy. Using this technology entrepreneurs and developers will be able to connect with investor and leading companies. The objective is to implement a blockchain-based system which favours the development of various kind of industries to make Dubai ‘the happiest city in the world.’

Incent Customer retention

Incent is CRaaS (Consumer retention as a service) based on Blockchain technology. It is a loyalty program which is based on generating token for business affiliated with its related network. In this system, blockchain is exchanged instantaneously, and it can be stored in digital portfolios of user’s phone or accessing through the browser.

Blockchain for Humanitarian Aid

In January 2017 the united nations world food program started a project called humanitarian aid. The project was developed in rural areas of the Sindh region of Pakistan. By using the Blockchain technology, beneficiaries received money, food and all type of transactions are registered on a blockchain to ensure security and transparency of this process.