Blockchain for Beginners, Part One: Introduction

New technology can be confusing.

I remember when my family first got a dial-up internet connection. I was probably about 8 years old. The strange bleeps, bloops and scratches of whirring, chaotic cacophony created by the computer had me completely baffled. Why did that happen? I couldn’t tell you, but over time, the connection dial tone became etched in my brain like a hieroglyph. Ask most people in my generation and they will recall the sound with fondness. It signified a whole new world of possibilities — and at the same time, a vast unknown.

I still don’t quite understand really how the internet works. All I know is that is has shaped my existence.

It’s easy to be intimidated by new tech. We’re living in an accelerated hyper-reality, where new technologies emerge and dissipate wildly, an endless barrage of information and ideas. It’s hard to know what’s worth your time.

If you’re reading this, it probably means you have heard about blockchain and cryptocurrency, but you are unsure about what it is. To understand the benefits, it’s important to first understand the basics of how blockchain works.

Blockchain is still a relatively new technology, and I am the first to admit that upon learning of it, I was confused — I still am in a lot of ways. However, I know enough to see that blockchain, like the internet, has the potential to change the world as we know it. Even if you don’t understand it at first, I hope this article helps you envision the kind of possibilities blockchain brings.

What is Blockchain?

“Blockchain” is a term used to describe a chain of cryptographically-linked “blocks” containing a ledger of transactions or other information that is stored on a decentralized internet network. Essentially, a block is created as a group of transactions (in the case of Bitcoin, a full block is 1MB of transaction data), which is verified by a majority of users on the network and then “published” to the blockchain.

Blockchain technology has several benefits when being used to record transaction data:


Blockchain networks rely on individuals or groups of users to verify transactions and achieve “consensus” on the order in which they occur (preventing double spending and other duplication errors). This is a decentralized, democratic process which rewards users (“miners”) for creating blocks using what’s called a consensus algorithm (more on these later). Essentially, the longest chain wins and is considered the true order of transactions, so if most of the users are honest and not working together to manipulate the system, the network remains decentralized, and is safe.

For blockchain networks with very small numbers of users, this can be problematic if a majority decides to team up to reverse or rewrite the order of events. But with networks like Bitcoin, with millions of users, this is a near-impossible feat.


Most people these days keep at least some of their money in a bank. As a society, we have come to trust banks to handle our cash. However, events like the 2008 financial crisis have led to widespread disillusionment in financial institutions. Really, when our money’s in the bank, we don’t know what’s happening with it. We simply have to trust that they will keep it safe.

With blockchain, the ledger of transactions and balances is transparent. For Bitcoin and Ethereum (and soon, Enjincoin!), there exists blockchain explorers that allow you to view all the transactions that have ever occurred on that particular blockchain. Every Bitcoin and Ether token in existence can be accounted for, ensuring that your coins are safe.


Once a block has passed consensus and is added to the blockchain, it is permanently linked to the one previous. This is achieved using a hash function to encrypt the data, creating a digital signature unique to that block, which encompasses the signature of the previous block. What this means is that if any data prior to an existing block changes, it will not match up with the accepted chain, and will be considered invalid. This protects the integrity of the chain and prevents fraudulent activity.

I’ll explain hashes and hash functions in more detail later, but essentially this means that the ledger, once recorded, cannot be changed. This immutability is yet another assurance of security that blockchain ledgers offer.

Not only are blockchain ledgers more secure, transparent, and decentralized than traditional methods, their unique properties allow for all sorts of possibilities in many industries.

Uses for Blockchain

Blockchain (and blockchain-inspired) technology can be employed in more areas than just currency and value transfer. The immutable record-keeping powers of blockchain are useful in all sorts of fields and industries. Here are just a few –


With growing distrust in traditional democratic processes (one need only refer to the 2016 US election vote tampering scandal), there is high demand for new ways to approach voting. Blockchain allows for transparent, tamper-proof voting and offers new systems of governance beyond the dated term representative system we have today.

Blockchain voting has the potential to make paper ballots obsolete. Not only does the immutable nature of blockchain make vote tampering virtually impossible, but it allows voters to easily cast their votes over the internet. In addition, some blockchain voting platforms are developing systems that will allow voters to vote on specific policy issues in real time rather than electing representatives, giving voters more agency in the political process and creating a truer democracy.

Supply Chain Management

Our commerce systems have grown exponentially in the last century. In many ways, they have become impossibly complex and opaque. Blockchain offers new ways of tracking commercial goods and supplies, which could have positive results for consumers and businesses alike (making it easier to track parts and ingredients, informing the customer so that they can make ethical purchases, improving inventory management, and more).

Virtual Item Ownership

Blockchain virtual items allow users to take virtual items out of games or other applications and store them in their crypto wallets, which users solely possess (unlike items that you buy in-game that cannot be removed or easily exchanged for currency). Blockchain virtual items give users an unprecedented level of control of their items, allowing them to freely and safely trade, buy, sell and even rent items. Virtual item ownership has long been riddled with fraud and centralization, however the use of blockchain technology has the potential to solve these issues.

A fair quantity of blockchain gaming platforms are built on the Ethereum network, and use token protocols ERC-20, ERC-721 and ERC-1155 to create virtual currencies and game items. However, there are several other platforms with their own blockchains.

While gaming seems the natural first stop for this technology, it has the potential to expand beyond into all realms of virtual items (virtual reality items, digital art, certificates of authenticity, and more).

That’s it for part one — hopefully this has helped you to grasp the basics of blockchain and its uses. In part two, I will discuss cryptocurrency and show you how to use a wallet!

Sam Finerty
Sam Finerty
Sam is a writer, artist and tech enthusiast from Australia who is passionate about blockchain’s potential for the gaming and arts industries. Full disclosure: holds ETH and ENJ.

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