Learning the Structure of Blockchains

All of us have been hearing about this mysterious ‘blockchain’ that has existed ever since cryptocurrencies hit the scene. It seems that whenever we hear about bitcoin or any other crypto coin, the utterance of blockchain shortly follows in the dialog.

Learning the Structure of Blockchains

What makes it frustrating is that it’s a brand new technology, and we haven’t gotten used to the fresh new jargon that comes with it. We’ve experienced this before – such as when personal computers became popular, and we were faced with ‘mouse,’ ‘floppy disk,’ and ‘hard drive.’

Blockchains are indeed unique

As I attempt to ease the tension of being overwhelmed by new technology, I will admit that the blockchain and crypto world does have a reasonably steep learning curve. And it is a little harder to grasp than most things in tech.

But as you learn more about it, then you will come to appreciate its complexity. As its name implies, cryptocurrencies are much safer and secure than our present financial systems. Its complexity has a lot to do with this heightened level of security.

Understanding blockchains

Let’s start by comparing a blockchain to something you do know a little about – and that is bitcoin. You already know that it’s a form of currency, and it is digital.

 A blockchain is the data structure that a digital entity uses. For instance, bitcoin has its own blockchain, and you can say that it is constructed of that blockchain structure. So blockchain is essentially software.

You might have heard of Ethereum, which also offers its own cryptocurrency; it exists on an Ethereum blockchain – which is unique to Ethereum.

All blockchains are made up of three basic parts:


A block in the blockchain represents a list of transactions that have been recorded on its ledger during a specific time period. A block’s period, size, and triggering event is unique for every blockchain.

Remember that not every blockchain considers the recording and securing the movement of its native cryptocurrency as its primary objective. It really depends on the function of the blockchain.

However, every blockchain does record these currency movements.  We could look at every blockchain transaction as being the simple recording of data.


A ‘hash’ links together each block of data in a blockchain. The hash is what mathematically chains the blocks together. For many people, this is the most challenging part of blockchains to comprehend.

We could also look at hashes as the magic that glue that holds a blockchain together, which in essence provides security and trust they possess. Each hash in the blockchain is made from the data of the previous block. These hashes make up the fingerprint of its data and also lock each block in order and time.

Even though blockchain is are a relatively new creation, uses hashes is not. The concept of hashing was first used over three decades ago. While hashing is an old innovation, it is a reliable one since it can create a one-way function that is impossible to be decrypted.

Hashing functions develop a complex mathematical algorithm that will map data, regardless of its size, down to a fixed size


A blockchain network is made up of “full nodes.” We can easily view them as computers that are running an algorithm that keeps the network secure. Every node has a complete record of every transaction that was ever processed by that particular blockchain.

These nodes are usually located all across the globe and can be operated by virtually anyone.

Operating a full node is laborious, costly, and time-consuming, so people aren’t going to do this for free. Therefore, people are incentivized to operate one of these nodes in exchange for cryptocurrency. And the underlying blockchain algorithm will gladly reward them – usually in the form of a cryptocurrency or token – such as bitcoin.

We often hear the terms blockchain and bitcoin used interchangeably, but this is not correct. Remember that bitcoin has its own blockchain. And bitcoin’s blockchain is the underlying data structure that enables transactions to be done with bitcoin.

Bitcoin is the name of a cryptocurrency, whereas blockchain is a class of software.