OKX Blockchain 60 Lectures | Lecture 4: How Blockchain Works

The "OKX Blockchain 60 Lectures" is a blockchain educational animation series jointly produced by OKX and Sina Tech. Designed for users with zero background in blockchain, it uses articles and animated videos to vividly explain blockchain concepts from the perspectives of concepts, technology, and applications across 5 major sections and 60 knowledge points. The content of this lecture was guided by Mr. Huang Lianjin, expert committee member of the Blockchain Branch of the Chinese Institute of Electronics.

Facebook is about to issue its own cryptocurrency through blockchain, Alipay plans to rebuild itself using blockchain, Tencent has used blockchain for digital invoices, and JPMorgan Chase intends to leverage blockchain to optimize its cross-border transfer services. Of course, blockchain is not limited to the financial sector, but have you noticed that financial services do account for the majority of blockchain implementation projects?

The reason for this phenomenon is that blockchain and finance share a natural fit. Fundamentally, blockchain can solve the trust problem in data, and finance is nothing more than the two words: trust. So today, Xiaokun will explain how blockchain solves the data trust problem through its operating principles.

Before diving into this principle, we need to understand something: we previously mentioned that blockchain is a database, but what sets it apart from conventional databases is that it is a distributed database.

If we compare a database to a ledger, a conventional database is like a single ledger, where only the creator—the centralized company—can keep accounts in it. Blockchain, on the other hand, is like multiple ledgers. In addition to the founder having one ledger, anyone who wants to participate can obtain a ledger. Everyone's ledger holds equal status and can completely record all data independently.

With this understanding, we can now discuss blockchain's principle. The principle works like this: when transaction data is generated, according to the normal database process, a centralized company directly processes the data, and all verification and protection are maintained by this company. This means one entity handles data recording and processing, which can easily lead to data opacity.

In blockchain, however, it is no longer just one entity maintaining the data. Everyone (including users) can participate. Besides the centralized company having a database, each person also has their own database. Each person's database is independent, equal in status, and can store complete data in a chain-block structure.

When data is generated, each participant can process the data and then send the processed data to others for confirmation. When most other participants believe the data is authentic and reliable, and that the processing is correct and can reach consensus, the data is recorded and finally synchronized to each person's database.

The advantages of this principle are threefold. First, power is distributed, ensuring the impartiality of data processing—no single person can independently record data, avoiding situations where a single recorder could be manipulated or intentionally falsify records. Second, it solves the data trust problem. Since data is recorded across multiple databases, if someone alters the data in a database, it can be easily detected, making data more transparent. Third, it reduces network security risk. Because multiple databases coexist, theoretically the records cannot be lost unless all nodes are destroyed, ensuring the security of ledger data.

In summary, the blockchain operating principle is a process of everyone keeping accounts together, mutually verifying, and reaching consensus. In this era of data explosion coupled with a trust deficit, we hope blockchain can become a ray of sunshine, solving these problems and illuminating the future direction of digital development.

Thanks to Mr. Huang Lianjin for his assistance and guidance on the content of this lecture.

Disclaimer

This article may contain product-related content not applicable to your region. This article strives to provide general information only and accepts no responsibility for any factual errors or omissions. This article represents the author's personal views only and does not reflect the views of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk and may be subject to significant volatility or may even become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. For questions about your specific circumstances, please consult your legal/tax/investment professional. The information contained in this article (including market data and statistical information, if any) is provided for general reference purposes only. Although we have taken all reasonable precautions in preparing such data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in full or in excerpted portions of 100 words or less, provided that such use is non-commercial. Any reproduction or distribution of the full article must prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, for example "Article name, [author name (if applicable)], © 2025 OKX." Some content may have been generated or assisted by artificial intelligence (AI) tools. Derivative works and other uses of this article are not permitted.

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