October 4, 2025, 4:50 pm |
Reading time: 7 minutes
Some people think they have been the greatest technological innovation since the invention of the Internet. Others believe that it is a serious threat to the monetary world order. Still others consider them as temporary fashion. Opinions often differ widely when there are blockchain. TechBook explains the basics.
There are various terms in the crypto world: from Bitcoin, to Ethereum, Coin and Token, cryptocurrency to blockchain. The latter is much more than a database that is limited to financial transactions. But what exactly is behind a blockchain? TechBook explains the term.
What is the blockchain?
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Simply explained, it is a publicly visible, digital register in which you can enter something but cannot extinguish anything. The technology has been around since the early 1990s. First of all, it’s not the blockchain at all, because there are many of them. In the meantime, there are hundreds of blockchains that work in different ways. There are more weekly. You all have one thing in common: you register transactions, such as the entrance and the output of digital tokens. In principle, such tokens are reed brands that represent themselves or something else. They can be sent and received using electronic addresses.
We know such tokens from our analog everyday life, for example as a deposit brands for beer glasses at a folk festival. Such a brand represents the glass on the one hand and on the other hand the sum that you have paid and that you get back when you bring the glass back. In principle, you could also act with these brands because they are worth something. Or you could paint them and sell them as works of art and much more. If you do not think of a deposit, but of a cloakroom brand, then it becomes clear how difficult the real value can be determined. It is the same with tokens on the blockchain.
If the token has its own blockchain, it is called coin. Everyone knows the digital currency Bitcoin. If the token does not have its own infrastructure, but runs on another blockchain, then it is “only” a token. The Meta-Verse currencies Sand and Mana, for example, use the Ethereum blockchain, so they are tokens and not coins.
Also read: What is Ethereum? The cryptocurrency at an overview
Why do you need a blockchain?
Blockchains have many possible uses – and new ones are constantly being added. Most people know the use of transactions of cryptocurrencies. Few know that blockchains can do much more than that. In the area of digital identity, they play a role when it comes to proving who you are via the Internet. Personal data, such as patient data, can be managed independently on the blockchain. There are even chains that specialize in the field of medicine.
Blockchains also play a role in digital management of supply chains. This makes it possible, for example, to track the origin and processing of organic products step by step. Some blockchains even reward the reduction of CO₂ emissions through tokens and thus contribute to the fight against climate change. Many other applications are already available or being planned
What is the difference between blockchain and Bitcoin?
Bitcoin and blockchain sound like synonyms for some. However, this is wrong. The Bitcoin blockchain is only one of many. However, it is the most important of the blockchains available. Bitcoin transactions are summarized in blocks, which are lined up together-as with a bank. Unlike the bank, however, there is no control instance that can ensure which transactions actually have taken place. The blockchain therefore has an integrated mechanism that guarantees that only valid blocks will be added to the chain.
The proof-of-work process
The Bitcoin blockchain works according to a procedure called Proof-of-Work (Pow). Each block contains a cryptographic hash value that refers to the previous block. A decentralized network of computers is working worldwide to find this value and add the new block of the chain. The reward for this is a defined Bitcoin amount-which is why the whole thing is also known as “Bitcoin Mining”. The disadvantage of the procedure is the immense consumption of energy, which is why many municipalities and even entire countries forbid mining.
The proof-of-stake process
The most important competitive procedure is proof-of-stake (POS). Here blocks are not “tapping”, but it is determined by a consensus mechanism who can attach the next block to the chain – and is rewarded with coins. In contrast to Proof-of-Work, proof of the work done-in the form of computing-intensive rate-is necessary. Instead, the members of the blockchain network must already be invested in the respective cryptocurrency in order to be able to validate new blocks-i.e. proof of a share (stake). This ensures that malignant actors cannot simply take over the validation of the blockchain.
For this procedure you only need a tiny fraction of Pow’s energy. The method is therefore more environmentally friendly, also better scalable, better handhable, cheaper and faster – there are almost only advantages. Pos is only more susceptible when it comes to security.
Most recent blockchains work according to the POS procedure. Some chains are now CO₂-neutral and some formally even carbon negative. There are also other procedures that are less common. This includes, for example, proof-of-capacity or proof-of-authority. Overall, mathematics that are in blockchains is much more complex than most people can imagine. But you also get a lot of technological options and security.
Read also: Bitcoin is climbing! The best apps for buying and selling crypto
What makes blockchains so safe?
There are several factors that make blockchains safer than other digital technologies. On the one hand, it applies: it has no place, it is everywhere and nowhere. A decentralized network globally connected computer creates the blockchain. Therefore, a burned -out data center or the theft of hard drives of a blockchain cannot harm. That is the security factor of decentralization. On the other hand, the following applies: sophisticated mathematical security procedures make the unauthorized access to data practically impossible. Only human failure, triggered by recklessness, manipulation, phishing or social engineering, can change something about security. That is the security factor of cryptography.
Risks arise more in the outskirts than on the blockchain itself. For example, so -called Bridges have been successfully attacked by hackers several times. These are software bridges that can be used to bring tokens from one blockchain to the other. There is also another significant risk: I want or must trust out of convenience or ignorance of a third party, such as central custody or a crypto service because I do not want to manage the digital keys myself, so-called third-party risks are created. If the operator of a crypto exchange is criminal, then my digital keys are in bad hands. In principle, however, this applies to many sensitive areas. You only remember various bank scandals. A reasonable solution to minimize third-party risks is the use of Bafin-licensed crypto exchanges that are now available.
More on the subject
The difference between the cryptocurrencies Bitcoin and Ethereum
Crypto handles you should know
Cryptocurrencies – what’s the point of digital money?
How will we use blockchains in the future?
Evidence of transactions on a blockchain can be viewed by everyone, but nobody can be changed. This special feature makes them attractive for many requirements of the present and the future. AI applications are increasingly being the subject of the innovative discourse within the blockchain scene. Through artificial intelligence (AI), the blockchain gets new possibilities.
With regard to the near future, this can also result in an application for journalism. A blockchain could use artificial intelligence to distinguish fake photos, fake videos and fake audios from real events and only record real news digitally. If an event had not been registered in the blockchain, it would not have taken place. Every photo, every video, every audio recording would be publicly verifiable. This is just an example of many ideas that will be created around the topic of blockchain and AI. So it is more than just Bitcoin, because blockchains offer the potential for the technological solution of different social problems.
