Plokiahel: How this technology is changing the digital world

Blockchain is no longer a future technology — it is already part of our daily lives. This decentralized digital ledger, based on cryptography and smart consensus mechanisms, has revolutionized the way we conduct trusted and secure transactions. From cryptocurrencies to supply chain management, blockchain has proven to be much more than just the artificial intelligence behind Bitcoin.

What is blockchain and why is it important?

The simplest explanation of blockchain is: it is a digital ledger maintained by a distributed network of computers, not a single central authority. Each transaction is recorded as a block, cryptographically linked to previous blocks, creating an immutable and transparent record.

The power of blockchain lies in its three main features. First, it is a decentralized system — control and decision-making are shared among all network participants, not a single central entity. Second, cryptography ensures data security and integrity. Third, once a transaction is recorded, it is practically impossible to alter it retroactively without the network’s knowledge and approval.

The origin of blockchain: a brief history

The idea of blockchain dates back to the early 1990s, when researchers Stuart Haber and W. Scott Stornetta developed cryptographically-based document integrity systems. Inspired by their work, many others contributed, culminating in the first practical application — Bitcoin.

Bitcoin was launched in 2009 and demonstrated that blockchain could underpin a practical cryptocurrency. Later, Ethereum expanded blockchain capabilities through smart contracts and decentralized applications. Today, blockchain has paved the way for thousands of projects and applications worldwide.

Strengths of blockchain: why it changed the game

Before blockchain, people had to trust central authorities — banks, governments, companies. Blockchain changed this paradigm. Let’s look at what this new approach offers:

Decentralization. Network control is not in one hand. Thousands of nodes working together make the system highly resistant to attacks and control concentration.

Transparency. Most blockchain networks are public — everyone can see all transactions ever made. This fosters accountability and trust.

Immutability. Once a transaction is recorded on the blockchain, it remains there forever. Each subsequent block reinforces the security of previous data, making retroactive changes practically impossible.

Efficiency and cost-effectiveness. Peer-to-peer transactions mean lower costs and faster transfers, especially for international payments.

Data security. Cryptography ensures that only the authorized initiator can approve a transaction, while others can verify its authenticity.

How does blockchain actually work?

Blockchain operation resembles a collective bookkeeping process where everyone must agree on the same pages. The process works as follows:

1. Transaction initiation. A user initiates a transaction, such as a cryptocurrency transfer. This transaction is broadcast to all network nodes.

2. Validation process. Each node verifies the validity of the transaction. Does the sender have sufficient funds? Is the digital signature correct? If all checks pass, the transaction is accepted.

3. Block formation. Validated transactions are grouped into a block. Each block contains data, a timestamp, and a cryptographic hash that serves as a unique identifier.

4. Linking in the chain. The new block references the hash of the previous block, forming a chain. If someone tries to alter an earlier block, its hash would change, breaking the chain — something the network would immediately detect.

5. Consensus. Before a block is publicly accepted, network nodes must agree on its validity through consensus mechanisms.

Cryptography: the backbone of blockchain security

Cryptography is the backbone of blockchain. Two main cryptographic methods are particularly important:

Hashing. This process converts data of any size into a fixed-length digest. For example, SHA-256, used by Bitcoin, makes each input uniquely identifiable. Even a tiny change in input produces a vastly different output — known as the avalanche effect. This ensures each block’s data is uniquely identified and unalterable without detection.

Public key cryptography. Each user has a private key (kept secret) and a public key (shared). When initiating a transaction, the user signs it with their private key. Others can verify the signature using the public key. This guarantees only authorized users can initiate transactions, while their authenticity can be publicly verified.

Consensus mechanisms: agreement in a distributed network

One of the biggest challenges in blockchain is: how do thousands of nodes agree on which transaction is correct? This is solved through consensus mechanisms.

Proof of Work (PoW). Used by Bitcoin, PoW involves nodes called miners competing to solve complex mathematical puzzles. The first to solve it can validate transactions and earn rewards. However, this requires significant computational power and electricity.

Proof of Stake (PoS). Used by Ethereum and newer networks, PoS is more energy-efficient. Validators are chosen based on how much cryptocurrency they stake. If they act honestly, they earn rewards; malicious behavior risks losing their staked assets.

Other mechanisms. Delegated Proof of Stake (DPoS) allows token holders to elect representatives. Proof of Authority (PoA) relies on validators’ reputations rather than stake.

Different types of blockchain

Blockchains are not all the same. Depending on needs, there are various types:

Public blockchain. Bitcoin and Ethereum are public. Anyone can participate, view transactions, and help secure the network. They are fully decentralized.

Private blockchain. Usually managed by a single organization for internal purposes. Access is restricted, and they are not fully decentralized.

Consortium blockchain. A hybrid between public and private — multiple organizations share and govern the network together. For example, banking consortia may create joint payment platforms.

Blockchain in practice: what is it used for?

While initially associated with Bitcoin, today blockchain has applications across many fields:

Cryptocurrencies and cross-border payments. Blockchain enables faster, cheaper, and more transparent international payments without banks.

Smart contracts and decentralized finance. Programmable contracts that execute automatically when conditions are met have opened the door to DeFi. Users can borrow, lend, and trade without traditional intermediaries.

Tokenization. Real-world assets — real estate, art, stocks — can be converted into digital tokens on the blockchain, increasing liquidity and accessibility.

Digital identity. Secure, tamper-proof, and decentralized identity management allows users to control their personal data.

Voting systems. Blockchain can create transparent, tamper-resistant voting and decision-making systems.

Supply chain management. By making the journey from raw material to sale visible, companies can verify authenticity and ethical sourcing.

The future of blockchain

Blockchain technology is still evolving, but its impact is already evident. As development continues — with improvements in energy efficiency, speed, and scalability — innovative use cases are expected to emerge.

Blockchain exemplifies how cryptography and decentralization can transform trust mechanisms. Whether enabling peer-to-peer transactions, creating new digital assets, or democratizing access to services, one thing is clear: blockchain is here to stay.