From cryptocurrencies to supply chains — blockchain has now penetrated these fields

You may have heard the term “blockchain,” but not many people truly understand what it does. This article will unveil the mystery behind this technology, helping you quickly grasp the essence, operating mechanism, and practical applications of blockchain.

Blockchain is like a “Collective Ledger”

Simply put, blockchain is like a ledger maintained collectively by thousands of computers worldwide.

Traditional ledgers are kept by banks or central institutions, which are susceptible to tampering. Blockchain is different — each transaction is recorded in a data container called a “block,” and these blocks are linked together in chronological order using cryptography, forming a “chain.”

Why is it called “blockchain”? Because data is grouped and stored in blocks, and multiple blocks are linked in time sequence through cryptography (Chain). Every time a page of records is filled, a new block is formed; when multiple blocks accumulate, they form the entire chain.

The biggest advantage of this model is decentralization. There is no single administrator; instead, it is maintained collectively by participants (commonly called “nodes” or “miners”) with computing power worldwide. Even if some nodes lose data or go offline, the entire network can still operate normally.

What does a block look like?

Each block contains three key parts:

1. Data Section (Data)
The stored content varies depending on the blockchain type. In Bitcoin, blocks record sender, receiver, and amount for each transaction. In other applications, it could be medical records, supply chain information, or smart contract execution results.

2. Hash Value (Hash)
Think of it as the “fingerprint” of the block — unique and tamper-proof. The hash serves two purposes: first, to help the network quickly locate and verify the block; second, if any data is altered, the hash will change, and the system will immediately detect the anomaly.

3. Previous Block’s Hash Value
This is crucial! Each block points to its previous block, forming an unbreakable chain. If someone tries to tamper with a historical block, not only will that block’s hash change, but the links of all subsequent blocks will break — making large-scale tampering nearly impossible.

To further prevent attacks, blockchain employs consensus mechanisms like Proof of Work (PoW), which make hacking costs prohibitively high, thus protecting the network’s security and consistency.

How is a transaction completed on the blockchain?

Taking Bitcoin transfer as an example, the process involves four steps:

Step 1: Initiate Transaction
The user inputs the sender’s address (their wallet), receiver’s address, and amount in their wallet software. The transaction info is broadcasted to the entire blockchain network and enters a waiting queue.

Step 2: Node Verification
Miners receive the transaction and perform two checks: confirm the sender’s wallet has sufficient funds; verify that the transaction is signed with the sender’s private key (digital signature verification). Once passed, the transaction enters the “pending packing area.”

Step 3: Packing into a Block
Under PoW, miners approximately every 10 minutes bundle hundreds of transactions into a new block.

Step 4: Global Confirmation
The new block is broadcasted to the entire network, and all nodes verify the legality of transactions and the correctness of the hash. When over 51% of nodes agree, the new block is officially added to the chain, completing the transaction. This process usually takes from 10 minutes to several hours.

Tip: Miners earn rewards after verifying transactions, such as transaction fees and newly minted bitcoins. Always double-check the recipient address, as Bitcoin transactions are irreversible.

There are three types of blockchain, each with advantages and disadvantages

Blockchain is not a “one size fits all” technology; different types can be chosen based on needs:

Public Blockchain

• Advantages: Anyone can participate without permission, transactions are fully transparent and nearly tamper-proof
• Disadvantages: Slow processing speed, high energy consumption
• Examples: Bitcoin, Ethereum, Solana, Cardano, BNB Chain, Polkadot

Consortium Blockchain

• Advantages: High controllability, faster transaction speeds, lower costs
• Disadvantages: Complex permission design, no unified standards yet
• Suitable for: interbank, energy, insurance, and other institutional transactions
• Examples: Hyperledger, FISCO BCOS

Private Blockchain

• Advantages: Better privacy protection, fastest transactions
• Disadvantages: Vulnerable to attacks, tokens can be manipulated, security risks
• Suitable for: internal enterprise data management, auditing

Four major advantages of blockchain compared to traditional technology

✅ Unparalleled Security
Verified transactions are encrypted and permanently recorded, even system administrators cannot delete them.

✅ Full Traceability
All transaction records are stored in an immutable database, making asset flows traceable.

✅ Efficiency and Cost Savings
Distributed ledgers enable quick and low-cost cross-border payments and settlements without third-party intermediaries.

✅ High Transaction Accuracy
Multiple nodes verify transactions collectively, making double-spending almost impossible.

Four real-world application cases

Supply Chain Tracking

IBM Food Trust uses blockchain to monitor the entire process of food from farm to table. Taiwan tea brand “Wang De Chuan” records origin and processing details on the blockchain; consumers can scan QR codes to see the full history, which is crucial for combating counterfeit goods and building trust.

Intellectual Property and Copyrights

NFTs (Non-Fungible Tokens) make ownership of art and intellectual property transparent. For example, Jay Chou’s “Phanta Bear” NFT project allows fans to support the idol directly and receive exclusive content and proof of ownership.

Medical Records

Estonia uses blockchain to store medical records; doctors can access data only with patient authorization, preventing tampering. Taiwan’s Ministry of Health and Welfare is also exploring blockchain for secure sharing of medical records among hospitals, so patients don’t need to carry paper reports when transferring hospitals.

Financial Instruments

Blockchain simplifies the issuance of bonds and promissory notes. For example, Bank of China International issued over $30 million in structured notes on Ethereum in June 2023, marking accelerated adoption of blockchain in traditional finance.

Three major challenges facing blockchain

❌ Lost keys mean assets are forever lost
Losing the private key means the virtual currency stored on the blockchain cannot be recovered.

❌ Energy and resource consumption
Public chains using PoW (like Bitcoin) require大量 electricity and computing power to maintain network security, causing significant environmental impact.

❌ Low consensus efficiency
Some private or consortium chains require time-consuming consensus processes, slowing down upgrades and development.

How to invest in blockchain-related assets?

Blockchain itself is a technological infrastructure and cannot be directly invested in. However, you can invest in its applications or related companies.

Spot Trading — The simplest and most direct
Buy low and sell high, like stock trading. For example, buy Bitcoin at $30,000 and sell at $50,000 to earn a $20,000 profit. The purchased cryptocurrencies can also be transferred into wallets or gifted to others.

Mining — Suitable for experienced investors
Participate in block validation by running mining hardware to earn rewards, but requires high initial investment and technical knowledge.

CFD (Contract for Difference) — Most efficient and convenient
No need for wallet keys, directly trade virtual currencies with leverage, betting on price movements. It supports leverage, allowing small capital to control larger positions. Be cautious — profits and losses can both multiply.

In summary, blockchain has evolved from a novel technology into a force shaping multiple industries such as finance, healthcare, and supply chain. Whether you are an investor or a regular user, understanding how it works has become essential knowledge.