Dumbing it down — how blockchain works (protocols, gas fees and more)

Understand the basics of blockchain in non-technical terms. Grandparents read the blog and approved our message!


To understand blockchain, you need to know what protocol means.

A protocol is a set of rules and guidelines that are used to transfer data between two or more electronic devices.

The rules and guidelines provide a framework for efficient data transfer.

In short, protocols define what language computers communicate in and how to structure the sentences.

If information is unstructured or doesn’t follow the guidelines, it will be rejected.

Furthermore, different blockchains have different protocols.

As a user, you have the option of choosing which blockchains to use based on protocols that align with you and your values.

Examples of different blockchains

There are multiple blockchains that exist in the world.


Each blockchain has its own protocol. Examples of some you may have heard of:

    1. Bitcoin
    2. Ethereum
    3. Ripple

Blockchain is a network. Where is the hardware?

Blockchain’s hardware is hosted by random people from around the world and is connected to each other through the internet.

These connections are known as nodes.

When hosting nodes, people get charged for electricity bills. Hosts of nodes get compensated to support the network through “gas fees”.

Ethereum is most well known for gas fees.

Each blockchain protocol has its own digital asset.

This digital asset is called a cryptocurrency or token. Gas fees are paid by the users in the form of cryptocurrency or tokens.

The fees are paid to network hosts each time a transaction takes place on the blockchain. Some blockchains have gas fees, some do not.

To summarize, think of paying a gas fee as giving your server a tip at the end of a meal.

How does blockchain work?

When you complete a transaction on blockchain it is etched into the virtual network, forever. This network is called a distributed ledger.

What is a distributed ledger? How is it distributed?

A ledger is a collection of information in which transactions are recorded.

Transactions can be financial (money transfer, payments, etc) or non-financial (medical records, voting, etc).

On blockchain, ledgers are distributed because the network is hosted by people from around the world, not a centralized private company or particular government.

To change information on the ledger, you need to control 51% of all the nodes on that particular blockchain.

Photo credit to PWC

Imagine if you had 10 million nodes on the blockchain. Trying to get control of over half of them from around the world is next to impossible.

This means once information is entered onto the blockchain, it is almost impossible to change.

What is a P2P network and how does it relate to blockchain?

Blockchain is also known as a Peer-to-Peer (P2P) network as people are connected by nodes hosted by other individuals; not centralized organizations like private companies or the government.

In a P2P network, information travels between nodes and is delivered without third-party oversight.


Comment below or just think about the following:

    1. What types of information do you wish was received without third part oversight?


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