How Does Blockchain Work?

Most cryptocurrencies are based on blockchain technology, a networking protocol through which computers can work together to keep a shared, tamper-proof record of transactions. The challenge in a blockchain network is in making sure that all participants can agree on the correct copy of the historical ledger.

Without a recognised way to validate transactions, it would be difficult for people to trust that their holdings are secure. There are several ways of reaching "consensus" on a blockchain network, but the two ways that are most widely used are known as "proof of work" and "proof of stake.”