Blockchain  

Blockchain Cheatsheet: A Beginner-Friendly Guide

Introduction

Blockchain is a system of storing and sharing data in a secure, transparent, and tamper-proof way. It is the technology behind cryptocurrencies like Bitcoin and Ethereum, but can also be applied in various other areas, such as supply chain management, healthcare, banking, and voting systems. This cheatsheet covers the most important concepts of blockchain in simple terms, accompanied by short examples to help you understand them quickly.

1. What is Blockchain?

  • A digital ledger of transactions that is distributed across a network of computers.

  • Once data is recorded, it cannot be changed easily.

Key point: Blockchain ensures trust without requiring a central authority.

2. Block

  • A container of transactions.

  • Each block has data, a unique hash, and the hash of the previous block.

Example 

  
    Block {
   index: 1,
   timestamp: "2025-08-26",
   data: "10 BTC",
   previousHash: "abc123",
   hash: "def456"
}

Key point: Blocks are linked together to form a chain.

3. Chain

  • A sequence of blocks connected by hashes.

  • If one block changes, all the following blocks become invalid.

Key point: This makes blockchain tamper-resistant.

4. Hashing

  • A function that converts data into a fixed-length code.

  • Example algorithms: SHA-256.

Example 

  
    Input: "Blockchain"
SHA-256: 625...9af

Key point: Even a minor change in data can result in a completely different hash.

5. Distributed Ledger

  • A shared database where each participant has a copy of the blockchain.

  • All copies are updated together through a consensus mechanism.

Key point: No single person controls the system.

6. Consensus Mechanisms

  • Rules for how participants agree on the blockchain’s state.

Popular Types

  1. Proof of Work (PoW): Miners solve puzzles (used in Bitcoin).

  2. Proof of Stake (PoS): Validators are chosen based on the amount of cryptocurrency they hold (used in Ethereum after the upgrade).

Key point: Consensus ensures that only valid transactions are added.

7. Smart Contracts

Programs stored on the blockchain that run automatically when conditions are met.

Example (in Solidity)

  
    contract SimpleContract {
   function pay() public returns(string memory) {
      return "Payment Received";
   }
}

Key point: Removes the need for middlemen in agreements.

8. Cryptocurrency

  • Digital currency that runs on blockchain.

  • Examples include Bitcoin, Ethereum, and Solana.

Key point: Used for payments, transfers, and as fuel for smart contracts.

9. Wallets

  • Digital tools to store and manage cryptocurrency.

  • Types: Hot wallet (online), Cold wallet (offline).

Key point: Wallets store private keys, not actual coins.

10. Public and Private Keys

  • Public key: Similar to your bank account number, it is used to receive funds.

  • Private key: Like your password, used to sign transactions.

Example 

  
    Public Key: 0xABC123
Private Key: 9FZ5H6K...

Key point: Never share your private key.

11. Mining

  • The process of adding new transactions to the blockchain involves solving cryptographic puzzles.

  • Primarily used in PoW blockchains.

Key point: Mining secures the network and rewards participants with coins.

12. Tokens

  • Assets built on existing blockchains (e.g., ERC-20 tokens on Ethereum).

  • Can represent money, property, or even voting rights.

Key point: Tokens extend blockchain use beyond currency.

13. Gas Fees

  • Transaction fees paid to miners or validators.

  • Higher fee = faster confirmation.

Key point: It is essential to keep the blockchain running smoothly.

14. Forks

  • A change in the blockchain protocol.

  • Soft fork: Backward compatible.

  • Hard fork: Not compatible, may create a new blockchain.

Key point: Forks can split communities and currencies.

15. Use Cases of Blockchain

  • Cryptocurrencies

  • Supply chain tracking

  • Voting systems

  • Healthcare records

  • Digital identity

Conclusion

Blockchain is not only about cryptocurrencies, but a comprehensive system for secure, transparent, and decentralized data handling. It works with blocks, hashes, and consensus to make data almost impossible to alter. By learning key concepts such as smart contracts, wallets, tokens, and mining, you can gain a comprehensive understanding of both the technical and practical aspects of blockchain. This cheatsheet is a quick guide to remember the basics and dive deeper when needed.

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