Blockchain 101 - Blocks, Chains, and Consensus

In the previous chapter, we looked at the three fundamental concepts of the blockchain: assets, transactions, and hashes. Assets are a digital representation of the things we transact on a blockchain through a transaction, which holds information about the assets that are transferred from one entity to another. You learned about the underlying transaction mechanism, what structure is used by a transaction, and how you can send transactions to another entity in the network. Besides transactions, we touched upon the concept of hashes, which allows us to create a secure signature that can be used to verify a transaction.

In this chapter, we will look into the building blocks of the blockchain itself: blocks, chains, and consensus. Using a step-by-step approach, I will explain how single blocks of transactions can create a stack that can be secured in such a way that it creates a chain surrounding these blocks, also called a blockchain. When transactions are submitted to the blockchain, there is a mechanism in place to ensure that the transaction is valid. Designated "peers" in the network validate the transaction, and when they reach consensus, or general agreement, the transactions are added to the blockchain as a new block.

In this chapter, you will learn about the following topics:

• What are the fundamental building blocks of the blockchain?
• What is stored in a block, and when is a block created?
• How does a block become part of the blockchain?
• How does the blockchain reach consensus regarding its transactions?