Don't be intimidated by the technical jargon commonly used to explain "blockchain." At its core, a blockchain is simply a type of database. Surprisingly, it's not an overly complex one; you could construct it using a spreadsheet with minimal effort.
There are distinctive features associated with these databases. Firstly, blockchains operate on an append-only principle, allowing the addition of information but prohibiting the deletion or alteration of previously entered data. Secondly, each entry, referred to as a "block," is cryptographically linked to the preceding entry. In simpler terms, every new entry must incorporate a digital fingerprint (hash) of the previous one. The result is a chain of interconnected blocks, commonly referred to as a "blockchain."
An essential characteristic of a blockchain is its immutability. Modifying a block alters its fingerprint, affecting subsequent blocks in a cascading manner. Since each block's fingerprint is included in the following block, any alteration becomes conspicuous. Essentially, any attempt to change information is immediately detectable by everyone on the network.
So, is that all there is to it?
Feeling underwhelmed? That's understandable. The groundbreaking aspect isn't about providing a clunky alternative to Google Sheets. The real innovation lies in the ability for everyone to download blocks from others on the network, constructing identical copies of the blockchain on their own computers—this is facilitated by the previously mentioned software.
Imagine you, along with friends Alice, Bob, Carol, and Dan, are utilizing this software. You decide to send five coins to Bob, broadcasting this instruction to everyone else. However, the actual transfer doesn't occur instantly. Simultaneously, Carol may decide to send five coins to Alice, sharing her instruction with the network. Participants can aggregate these pending instructions at any time to create a new block.
But what prevents someone from exploiting this system?
It might be tempting to create a fraudulent block claiming "Bob pays me a million coins" or engage in transactions with funds you don't possess. However, the system incorporates cryptography, game theory, and a consensus algorithm to thwart such attempts, ensuring that participants cannot spend funds they are not authorized to use.