How Blockchain Works?

Blockchain is a decentralized digital ledger that records transactions across multiple computers in a secure and transparent manner. Unlike traditional databases, which are controlled by a central authority, a blockchain is distributed across a network of nodes (computers), ensuring that no single entity has complete control over the data. This decentralization makes blockchain highly secure, tamper-resistant, and reliable.

Blockchain transactions follow a specific process to ensure security and transparency. Unlike traditional financial transactions that rely on banks or payment processors, blockchain transactions occur directly between users in a peer-to-peer network, eliminating the need for intermediaries.

A critical component of blockchain technology is its consensus mechanism, which ensures that all transactions are verified and agreed upon by the network before being recorded on the blockchain. Since blockchain operates without a central authority, it relies on these mechanisms to maintain trust and prevent fraud.

Smart contracts are self-executing contracts with the terms of an agreement written directly into code. They run on blockchain networks and automatically execute actions when predefined conditions are met, eliminating the need for intermediaries like banks, lawyers, or brokers.