Ethereum: How does the blockchain work, explained in layman terms?

Ethereum: A Simple Explanation of How Blockchain Works

Imagine you’re at a party and you want to give your friends some cool stuff as a thank you for coming. You could just give them cash or physical gifts, but that’s not very efficient, right? What if everyone had a copy of the list of what everyone wants, so that everyone agrees on who gets what?

Basically, that’s what blockchain is: a digital ledger (a list) that keeps track of transactions (what people want and give to each other). But instead of using cash or physical gifts, it uses special computer codes called “blockchains” to record everything.

Here’s how it works:

1. A group of people agree on the rules

A group of people, called miners, work together to create a new “block” (a collection of transactions). They use powerful computers to solve complex math problems, which helps verify the validity of the block. This ensures that only one person can add new blocks to the ledger at a time.

2. A transaction is recorded in the blockchain

The miner collects a group of transactions from all the people who joined the party (i.e. wanted to send something or receive something). They then combine these transactions into a single block and add it to the ledger.

3. The block is verified by miners

The miner’s computers check the block for any errors or duplicates, making sure that the new transaction is valid. If everything looks good, the miner broadcasts the new block to the network.

4. Everyone can see the blockchain

Once a new block is added to the ledger, it is visible to all participants. This allows anyone to trust that everyone has an exact copy of the list (the blockchain).

5. Miners Get Rewarded for Their Work

Miners are rewarded with freshly minted Ethereum tokens (E Ether) for solving complex math problems and verifying blocks. The more blocks they solve, the more E Ether they earn!

How ​​​it works in practice:

• When you send some Ethereum to someone, it is added to a new block in the blockchain.

• The blockchain is then broadcast to the entire network of miners.

• Miners verify the transaction and add it to their copy of the ledger (blockchain).

• Everyone can see the updated blockchain, which ensures that everyone has an accurate record.

In simple terms, Ethereum uses blockchain technology to create a secure, transparent, and tamper-proof ledger of all transactions. The decentralized nature of the blockchain allows for peer-to-peer transactions without the need for intermediaries like banks or governments.

Although this explanation may have taken some time to understand, I hope it helped you understand how Ethereum works!