In this article, we'll look at blockchain from a simple and accessible perspective so that everyone can understand how it works and why it's important.

How Blockchain Works: Mempool and Blocks

When you send cryptocurrency or perform any operation on the blockchain, your request first enters the mempool. Think of it like waiting in line at the checkout in a supermarket. When the mempool is filled enough, transactions from it are grouped into blocks and added to the blockchain.

Each block contains information about transactions that occurred within a certain period of time. Then the blocks are linked together, creating a chain that is constantly updated and growing. Note: Blockchain is an immutable database. Once a transaction is in the blockchain, it cannot be changed or deleted. This ensures transparency and reliability of operations.

Encryption System in Blockchain

This is what makes blockchain secure. Each block in the blockchain chain contains its own unique code called a hash. A hash is the result of applying a mathematical function to the contents of the block. Any change in the content of the block will result in a change in its hash, which will be immediately noticeable to all network participants.

Now imagine we have several blocks linked together. Each block contains a reference to the previous block and the hash of the previous block. This creates a chain where each block depends on the previous block and hash. This means that to change one record in the blockchain, you would need to change all subsequent blocks, which is practically impossible.

Decentralization: Advantages and Disadvantages

In a traditional financial system, all operations are controlled by a central authority, such as a bank or government. Decentralization, on the other hand, means that control is distributed among many participants rather than one central authority.

The advantages of decentralization include increased security (as there is no single point of failure), transparency of operations, and the absence of centralized control. However, there are also disadvantages, such as slow transaction speeds and the complexity of decision-making due to the lack of a single regulatory body.

Blockchain is a technology that is changing our world. It provides security, transparency, and decentralization, making our financial transactions more reliable and accessible. The future belongs to decentralization, and blockchain is the key to that future.

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