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How does a blockchain work - Simply Explained

28978 ratings | 2401301 views
What is a blockchain and how do they work? I'll explain why blockchains are so special in simple and plain English! 💰 Want to buy Bitcoin or Ethereum? Buy for $100 and get $10 free (through my affiliate link): https://www.coinbase.com/join/59284524822a3d0b19e11134 📚 Sources can be found on my website: https://www.savjee.be/videos/simply-explained/how-does-a-blockchain-work/ 🐦 Follow me on Twitter: https://twitter.com/savjee ✏️ Check out my blog: https://www.savjee.be ✉️ Subscribe to newsletter: https://goo.gl/nueDfz 👍🏻 Like my Facebook page: https://www.facebook.com/savjee
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Text Comments (879)
Matthew Mosley (1 day ago)
Couldn’t you just modify the hash of a block and AND the previous hash of the next block? Why do you have to modify all the blocks in order to make a change?
sama foad (2 days ago)
Informative in a short time 👍
Ted Smith (2 days ago)
But, can I use one to tow a bogged car?
elnaz dadvar (2 days ago)
perfectly and simply explained, thank you!
Crypto Monkey (3 days ago)
Mark Dunn (3 days ago)
Seriously great video man. I've read like 3 articles and left confused each time. Your video really glued it all together. Block Chain is exciting.
Shuforces (3 days ago)
Mmmmh ... hard to get but I think I understand It a little bit now.
rocel Aidoma (3 days ago)
Robbie Culliton (7 days ago)
Finally I understand blockchain ! Brilliant explanation thanks
mikey 0292 (9 days ago)
this vid sucks
Tien dien tu Viet (10 days ago)
very simple, thanks
komal Roma (11 days ago)
very interestingly explained the whole process, cheers!
Mike Kleinsteuber (12 days ago)
Nicely described. It would have been nice to have added how 'Proof of Work' is accomplished.
Simon Xyz (12 days ago)
Thanks for the explanation!
PureHustler153 (12 days ago)
Would anyone agree that blockchain structure is similar to a linked list?
kellerr13 (12 days ago)
Blockchain is nothing but CRC 2.0
bert boer (16 days ago)
Thank you for this video, so much clearer than the others. Very nice.
SHAM XHAM (16 days ago)
Extraordinary project!!!!
Karan Krishnani (18 days ago)
Sarah Daniels (20 days ago)
Would it be correct to say that blockchain is the way crypto currency works, not the crypto currency itself? It’s the process of moving and recording transactions?
Yes, cryptocurrencies are built on top of a blockchain. A blockchain is just a tool that allows you to store data distributed and so that it can't be changed anymore. What data you store is unimportant. But cryptocurrencies obviously store transactions.
Neonexus (20 days ago)
I'm still not 100%, but this video has been the biggest help so far
Jake O (22 days ago)
I finally get it. Well done. I have been trying to figure out what blockchain was for a very long time and nobody seemed to be able to explain it.
Se-Hyun Yang (23 days ago)
sorry i dont get it why do you tamper hash? dont you want to tamper data?
It's the inverse. In the video I tampered with the data and because the data was changed, the hash changes as well.
mymaninchampagne (24 days ago)
At last, an understandable explanation of blockchain with clear, simple and yet informative illustrations and commentary. Thank you
INFOCENTRO SUN-SUN (24 days ago)
palatable johnson (25 days ago)
alot of people having all these questions and criticism if you would criticize fiat currency the same way, none of this would be necessary
TECNO MUNDO (26 days ago)
Does anyone got the script of this video?
I do 😬
Literally Felicity (29 days ago)
What a clear explanation, even people that are not familiar with cryptocurrencies can grasp this.
JB (29 days ago)
4:30-5:00 is a great summary.
Menasha de Silva (29 days ago)
thank you! this pace was easy to keep up with. the graphics helped as well.
Mindaugas Žilionis (1 month ago)
This explanation gives a very good explanation of a principle, but I still struggling to understand how money can be sent from USA to Germany by not using banking system.
David Appleseed (1 month ago)
You saved me for my AP project because this explained everything i needed
In4cer in4cer (1 month ago)
Thanks for what you are doing. Just discovered your site.
Glad you like it! Keep learning ;)
Paul M (1 month ago)
Thanks that makes sense. The term 'blockchain' is so weird. Nothing intuitive about its meaning!
BLiNK like Limario (1 month ago)
Where my fellow ENP students at?
Brad Smith (1 month ago)
Neat project!
John Cena (1 month ago)
Your voice sounds like Great Scott's voice!
Dear Xavier, Thanks so much for the video which really simple and very easy to understand the basic concept of blockchain technology. By the way, at the 1:15 minute from the "How does a blockchain work video", you explained that the data in the bitcoin transaction will have only the "From" (Sender), "To" (Receiver) and "Amount" (amount of bitcoin to be send) data. But, May I wonder how the blockchain node could know that the sender has enough amount of bitcoin to send and how the blockchain node update the amount of bitcoin in the sender and receiver wallet? Thanks so much in advance for your kindly advice,.
Sure! It's actually really simple. Each node on the network knows about all the transaction that have ever happened on the blockchain. If I received 6 transactions of 10 coins, then each node can calculate that my balance is 60 coins. So in summary: checking the balance of a wallet means checking all the transactions to and from that wallet.
MyCatFooed (1 month ago)
This seems easily beatable to me. All you need, other than many very powerful computers, is a fellow group of conspirators -- The 51% result would be simple to achieve quickly, and further, higher %s appear theoretically possible, as long as you limit the new members of the chain and maintain the integrity of your fellow cohorts. System beaten. No?
It depends on the size of the blockchain network. In Bitcoin's case it is going to be pretty hard to get that much computing power. But on smaller blockchains it's trivial (like you said). So the system is indeed beatable, especially proof-of-work. That's why many projects are working on new consensus algorithms (like proof-of-stake) to balance this.
Banking Innovations (1 month ago)
Amazing and very "simply explained". Never seen such a simple animation for conceptualization of a technology. Kudos to the makers. Love it.
JK Hunter (1 month ago)
Great simplified explanation! Thank you!
answerBACK-films (1 month ago)
I have never understood "proof of work" as a valid way to make the blockchain tamper proof. What exactly does the computer solving a puzzle have to do with proving a transaction was/is valid...this is bizarro world. And whats more it has to be first, like winning a prize...and then, irrelevant puzzle solved, this proves the transaction took place, somebody paid for a pizza somewhere" HOW DOES THIS PUZZLE WORK PROVE ANYTHING about the transaction it is fighting to prove is valid..
Hang on, these are two different things! Proof-of-work doesn't verify the transactions inside a block. It's just a way to slow down the creation of blocks. It's a reliable way to prevent people from making a ton of blocks at once. Verifying transactions is something else. To do that, the miner checks that each transaction was signed with the correct keys (eg the key of the person who sends the money). It also checks if that person has a high enough balance to make that transaction. Hope that makes more sense now ;)
NSS IPM VN (1 month ago)
Great work
Tiffany LaBruno (1 month ago)
totally agree I finally get it...well done
Akin Akinrinade (1 month ago)
So blockchain is an implementation of linked list. If you remember that course 'Data Structure'
Absolutely! It's like a linked list with some additional properties to prevent tampering.
Dominic Candy (1 month ago)
Excellent beyond all standards!!!!
Majd Sahmarany (1 month ago)
Fine work..
universalsheep (1 month ago)
you should say "if the UID of the block changes" instead of fingerprint. fingerprints arent unique
Sure, but UID's are difficult for people to understand. Fingerprints are easy to understand (and they are unique enough to use an example)
jayesh PATOLE (1 month ago)
Can block chain be Next internet????
Yes it can! Check out my video on IPFS which uses a Blockchain-like system to do just that!
Gary Fox (1 month ago)
Really well explained. Nice video & style.
Cloudy Geek (1 month ago)
another not so good explanation by someone who is not a dev
Oops. I actually am a developer.
May Rose (1 month ago)
Only way this works is to replace the people shown here as miners with computers. I'm not buying it. This will be great for hackers and manipulators. There is no way that people will be able to manage hundreds of millions of transactions daily to add to ledgers.
Figable (1 month ago)
Great explanation! How does each of the members know how to "verify" a block?
Jannatul Ferdausi (1 month ago)
Really like your wonderful explanation. Thank you very much.
Guttini (1 month ago)
Zachary Quinn (1 month ago)
it's a linked list, but instead of memory address information, it's hashes. interesting. that's not a new concept by any means.
Joseph Kolarz (1 month ago)
THank you
Siva Paranitharan (1 month ago)
Savjee! Thank you. You are very easy to follow and superbly illustrated. Kindly keep doing more. Best Regards
Jeremy Thompson (1 month ago)
Can you restrict yourself to the peers you consider "legitimate"?
Jeremy Thompson (1 month ago)
+Simply Explained - Savjee Does this solve the 51% problem, then?
This is the default behavior of most Blockchain implementations. They'll just ignore bad actors or even ban them.
Iisa Jenkins (1 month ago)
I want to learn how to trade forex
ColorMysteries (1 month ago)
Cryptocurrency is the future. It is just a matter of time.
Dilan Sharma (1 month ago)
Investing cryptocurrencies is also a safe means of saving.
LeahSephira (1 month ago)
Thank you for this explanation, it was simple and to the point. At least I understand it now :)
IETCHX69 (1 month ago)
Seriously ? Thank you . You dig ?
Hieu Luong (1 month ago)
The proof of work is still not clearly explained.
mohit bansal (1 month ago)
Super Simple. The first time I think somebody is trying to explain you and not confuse you on this topic.
Khilna Mamlani (1 month ago)
thanks.. well explained
Konseq (2 months ago)
Did you just delete my comment to your video??
No, didn't see any comment. It's possible that youtube marked it as spam.. Not much I can do about that I'm afraid.
Future Done Right-TM (2 months ago)
Very helpful. Thanks for making it so simple. That's what I did with my book. I worked to make the business uses of blockchain very simple so people get it. Too much blockchain talks past people.
Valter Zikovic (2 months ago)
Thank you.
Craige Banios (2 months ago)
What happens if someone (Federal Reserve) dominates the mining for a certain (or all) crypto currency? Could someone with enough computing power steal everyone's "money?"
rightchain yi (16 days ago)
I have a project that you might be interested in.
pkay dennis (25 days ago)
the current banking system (fiat)
Craige Banios (2 months ago)
Thanks Savjee (If that's your name). I thought that would be the case from your other explanations along with a few other folks input. :)
Actually that would be possible. If you can gather more than 50% of all the computing power on the network, you can approve any transaction you want. Even fake or fraudulent ones. On big networks like Ethereum and bitcoin it's hard and expensive to achieve this, but possible non the less!
Craige Banios (2 months ago)
Tell me why you say that. Or direct me to an explanation of such please. Thank you.
Vishal Thokade (2 months ago)
It says: adding a block needs to have consent of all the members which is impossible to do. Does it mean that one can never add a block to a chain?
Technigeek (2 months ago)
nice simple explanation , but there is one note i wanted to say , there is a method hackers have managed to make its called the %51 attack , which is taking over the blockchain by having the power of hashing controlled by super huge miners that can make more than 50% of the hashing power of the blockchain , so they can manage the next block as they want , they will inject a block with information that benefit them , in anothet words , they steal other peoples coins , this is a sneaky way for taking over the blockchain, even though it looked impossible before , but now its not impossible any more
the black panther (23 days ago)
I agree with you 100per cent thanks for telling it like it is. Keep it real 24/7.
pamanudavy (1 month ago)
@actually he mentioned it at 4.46 but he was not interested in explaining it.
Sentinel of Fortune (1 month ago)
Which is why we have decentralization my friend
Josiah Umezurike (1 month ago)
You are correct it assume only 1/3 of the participators are bad guys. Therefore the 51% attack is being used mostly in Asia regions. This allows you to control the mining thus consensus PoW.
Craige Banios (2 months ago)
Technigeek Can you say, "Federal Reserve?"
Purnima Gupta (2 months ago)
this is superb..thanks
Gaming Champ (2 months ago)
Hi , I really like this topic blockchain and adding some important topics as well in youtube and linkedin for blockchain please see the link
Lorenzo Luiz De Souza (2 months ago)
Hackers be like, "Challenge accepted"
Miguel G (2 months ago)
sorry if this sounds like a stupid question (still trying to understand blockchain), but would a faulty genesis block then ruin the entire chain? I'm thinking along the lines of fake news and misinformation. If the genesis block contains faulty data to begin with, and a chain is created from this genesis block, would this then be difficult to fix because of how difficult it is to change data?
There are no stupid questions! The genesis block is almost like a dummy block. It contains almost no data. In theory you could use a Blockchain to store fake news, and yes, it would be impossible to remove it later on... That's true for the Genesis block but also for any subsequent blocks.
Cheeky Nham (2 months ago)
Nothing is impossible in this day and age. Technology evolves all the time, and someone will figure out how to tamper.
Aditya Sawdekar (2 months ago)
Very wonderfully explained. Finally I got it
fábio (2 months ago)
Thank you for saving my presentation!
Charlikins (2 months ago)
Finally after all my research I know nothing about blockchain. this makes no sense.
Any questions in particular?
Ramanan austin (2 months ago)
What will happen if millions of blocks are created at once and how will a user authenticate every single one of them ?
Ramanan austin (2 months ago)
Thank you for patiently answering my questions
Yes, at least half of the network has to approve the new block. If not, the block is rejected. It is possible that two poeple create a valid block at the same time. This is a natural fork. The network however only chooses one of the blocks and builds on top of it. The other block becomes stale and transactions inside will be re-executed.
Ramanan austin (2 months ago)
So all or 50% of the 2000 has to authenticate the new block? And a problem will raise when more than 1 wants to create a new block at the same time ?
Depends on the Blockchain. Bitcoin for instance can store a maximum of 2000 transactions per block. Others might have a lower or higher limit.
Ramanan austin (2 months ago)
How many users can a single block have ?
Daria Zueva (2 months ago)
I still don`t understand
Any specific questions?
sha li (2 months ago)
thank you ! your explanation are so easy to understand.
Max Gillespie (2 months ago)
This is super clear and to the point. Thanks so much!!
aranguren12 (2 months ago)
Hello Savjee, thank you for this video. I´d like to ask you if the illustrations used in this video can be used in academic papers . (Attributed of course)
anon ymous_user (2 months ago)
Good explanation, also useful for getting to sleep. Sorry but true.
noodlefoo (2 months ago)
I still don't know what type of data is contained in a block.
A transaction is stored on the blockchain when you send or receive some Bitcoin. If you buy something with Bitcoin there is a transaction created where you send X amount of coins to a store for example. So, if you do a transaction with Bitcoin, it's stored inside the chain.
noodlefoo (2 months ago)
What and whose transaction data? The banks? Retail shops? Online purchases? Illegal transactions at dark web?
It's mentioned in the video. Bitcoin blocks for instance contain transaction data (for sending and receiving money).
David Regourd (2 months ago)
great explanation, thanks
Ashish Pandey (2 months ago)
This is superb man, thanks for sharing !
Mr. Right (2 months ago)
Is it possible for a virus to analyze the hash and replace it making the other blocks think that nothing happened. Is it a mix of human and computer algorithms or just computer?
Yes, a virus can do that. In fact: you can change anything you want because it's your copy of the Blockchain. However, all your changes are only local and you won't be able to 'convince' the other computers on the network that your changes are the 'truth'. They will just reject them.
Aakash Calmly (2 months ago)
Does anyone know what kind of animation software is supposed to be used to make such videos?
Any software will do but After Effects is the most popular.
omar isaid (2 months ago)
Simple , useful , and clear . Thank you
Teresa Miller (2 months ago)
Goals! 👌🏼
chi cong Nguyen (2 months ago)
Hay hay
Sachin Kainth (2 months ago)
I thought hashes were not unique!
Well, technically we can't guarantee that a hash will always be unique. But the chances of 2 different things producing the same hash is very small (and new hash algorithms try to make it even smaller). When 2 different pieces of data produce the same hash, we have a "hash collision".
Neil Canfield (2 months ago)
Digital Amway. Serious question though.I know knothing about Bitocin or BC but this video has helped. Let's say I want to buy some Bitocoin form you Coinbase link Do i Just go to that link and create a UN and PW and make a transaction by transferinf funds from my bank to the Bitcoin? DO i have to create a wallet? or do I get a confirmation email with my Hash saying thank you for your purchase?
Coinbase manages everything for you and they make it pretty easy. You transfer money to them and they put your dollars/euros into your account. Afterwards you can use your dollars to purchase bitcoin. Again coinbase will handle the creation of a wallet automatically.
geneiuspower (2 months ago)
yaaaaaaaaaaaaaaaaa still confusing . it's just funny that humans make simple things seem complex when it's actually not .
So you're saying you're confused but that it's not complex at the same time? Huh?
Justin H. (2 months ago)
Wont this only continue to work if everyone online stays anonymous. What about when were all chipped and you can identify who's who?
Uhm... ¯\_(ツ)_/¯ Kind of a weird question. Blockchain doesn't have to be anonymous to work.
jesusfernan39 (2 months ago)
Great job! I finally got it.

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