Blockchain operates on the principle of a chain of blocks, where each block contains a list of transactions. These blocks are linked together in a chronological order, forming a continuous and unchangeable chain. The decentralized nature of blockchain means that no single entity has control over the entire network, reducing the risk of fraud and manipulation. Consensus algorithms, such as Proof of Work (PoW) or Proof of Stake (PoS), ensure that all nodes agree on the state of the blockchain, adding a layer of security.
Blockchain can be public, allowing anyone to participate, or private, restricting access to authorized users. Smart contracts, self-executing contracts with the terms of the agreement directly written into code, further enhance the functionality of blockchain by automating processes.