I did a lot of intensive research on how the Blockchain actually works. I understand the machinery but it's really difficult to explain this to a layman. Could someone provide the simplest of explanation that can be comprehended by any person, whether or not he/she is a tech enthusiast.

  • I feel like the problem here is the assumption that bitcoin is more complicated than the financial systems that we already have. It's not -- it's just that most people are well in the dark about many large parts of our financial systems, and aren't even aware that they are in the dark about them. In that case, explaining bitcoin becomes about understanding your audience -- in this case "laymen" -- and what's relevant to them. It's entirely possible that most of what you're trying to explain beyond "it's electronic" money is irrelevant to most of your audience not composed of tech enthusiasts.
    – John Henry
    Dec 15, 2015 at 22:07

3 Answers 3


The purpose of the blockchain is to create agreement about the ownership of balances.

The problem is that if everybody was creating their own records of transactions they witness, the various records would be in different orders and any conflicting transactions would cause a split in what is considered true. At any point of time it would be very unlikely for any two sets of records to match completely.

Traditional money services solve this by having a trusted entity as the arbitrator and sole source of truth.

Bitcoin solves this differently: Each participant collects all transactions they hear about and repeatedly proposes these packaged as a set of updates. We call these sets of balance updates blocks. Instead of having a sole source of truth, the network holds a lottery to designate one of these blocks as the commonly accepted new status quo of the balances. As each block refers to the previous commonly accepted network state and by its acceptance creates a new commonly accepted network state, the blocks create the eponymic chain of commonly accepted states.

The resulting blockchain contains the record of every transaction ever performed on the Bitcoin network. It also allows any new participant to audit the accuracy of the present status quo of the network. Upon joining, they rebuild the set of balances by applying each block in the right order, and will finally arrive in agreement with the rest of the network.


The 15-second spiel:

Blockchain = a distributed (shared) append-only ledger, where each node in the network has the same copy of it. This ledger contains references to every transaction that has ever occurred on the network which is secured by the mining network, which validates and confirms those transactions. The ledger is publicly viewable via a 'block explorer' to prove that a transaction took place or that an address (public key) has a certain balance, however encryption keeps that information obscured in the form of hashes and hash pointers. Because the ledger is shared and encrypted, any attempt to alter the data inside of it would require an attacker to simultaneously hack each node of the network and overcome the encryption. Even if it could be attacked, due to the nature of hash functions, the tampering would be evident.


A block chain is a permanent record of transactions in "Bitcoin," (an alternative cybercurrency). Once created, the record basically cannot be altered (giving the currency its validity. The verification process takes place when users validate the transaction electronically. Once this happens, a process is set in motion that is impossible to overturn except by 51% of worldwide users).

The system is protected by "hashes," which are encrypted. It is difficult, though not impossible to break into the system, but the result would be so evident than any illegitimate changes to the system can be detected and cancelled.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.