Let us consider a scenario to get a quick overview of the concept behind blockchain. Your friend, Bill, approaches you for a loan of Rs 50,000. Both of you decide to maintain a personal ledger to keep a record of the transaction. To avoid discrepancy, you invite 3 more trusted friends to maintain their personal ledgers of the transaction. Now, each one of you has a ledger showing the transaction. When Bill returns a part of the money everyone is invited to update their ledger to reflect the details of the transaction along with the outstanding amount that Bill must pay. This ensures that all the ledgers tally with each other and no one manipulates any record. Even if someone makes a mistake, he would be corrected by others as the ledgers are open for audit. 

In the blockchain version, you and Bill as well as the friends are usually people who neither know nor trust each other. The digital mechanism enables these unknown people to be part of a transaction without the need to trust. There is complete confidence in the authenticity of the transaction because the information is tracked by the system and protected against modification and tampering. In the blockchain system, a copy of the information (file) with a code embedded is shared with every stakeholder. This is known as a block and the first block of a blockchain is the Genesis block. If there is an update, the new block is added to the chain after the revised version of the information is verified by the network. The blocks are linked together, and they can only be appended. This is like version control of a file with each block “holding” the earlier version of the file. If anyone wants to audit the data trail, they can simply backtrack through the blocks.