Blockchains offer arguably the biggest jump in the technology of exchange since the development of money. The concept challenges centralised government control of money and offers vast potential for sovereign individual trade.
Perhaps the most famous quote associated with blockchain technology came from an anonymous virtual currency user, who described the innovation as "a transfer of trust in a trustless world." The blockchain network allows for the unregulated exchange of digital assets, removing the need for financial or government intermediaries to verify and guarantee payments. In other words, virtual currencies survive based on blockchain networks.
The term "blockchain" was first popularized by the revolutionary cybercurrency Bitcoin. It refers to the secured transaction ledger that all Bitcoin users share simultaneously across the Bitcoin network. Any time a transaction is posted using Bitcoin, the blockchain captures it and automatically updates the user account balances for the entire system.
Functioning of Blockchains
Even though it is popular to discuss blockchains in terms of algorithms and accounting ledgers, since they appear to drive them, the real secret of blockchain technology is it is a self-executing history book. In other words, all current and past states of every program in the network are always publicly visible, making it incredibly difficult to tamper with or commit fraud. As long as the encryption on the blockchain remains trustworthy and intact, every single trade of goods and assets remains recorded in the blockchain in perpetuity.
Transfer of Power
The main reason so many people are fascinated with Bitcoin and other virtual currencies is the same reason most governments are loathe to accept them: they transfer power from central money control and distribute that power among the masses. This is only possible because of blockchains.
It is analogous to timekeeping technology. Before the popularization of watches, and eventually digital clocks, time was kept based on large central clock towers. These clock towers were expensive to build and maintain, but their need vanished when individuals could keep track of time themselves.
(adapted from Investopedia)