Here at ProfitStance, we are passionate about cryptocurrencies and the blockchain. Everyone is flooded with information on a daily basis that can resemble science fiction. One of our goals at ProfitStance is to simplify new technology so the rest of us can understand it. In this article — we will address the blockchain, how it works, and its advantages. In this post, we’re answering the question of “what is the blockchain?” Wish us luck!

What is the blockchain?

To start us off, imagine a third-grade classroom full of children sitting quietly at their desks. Little Susie is one of these children. On Susie’s desk are 10 apples. Johnny, who is a classmate of Susie’s, wants some of those apples and trades Susie for two of them. Now Susie has eight apples and Jonny has two. Each of the other children in the class writes down this very thing: Susie has eight apples and Johnny has two. When this is done, the class decides to call this trade “A to B”. Then another student from the hall, Amber, enters the room and wants three apples. She trades two from Susie and one from Jonny. Now Susie has six apples, Johnny has one, and Amber has three. Each student in the classroom, once again, writes down the trade: Susie has six apples, Jonny has one, Amber has three, again the students give the trade a name, this time “B to C”. But, uh-oh, as the students look at each other’s work to make sure that everything is correct they discover that Nikko, one of the students who has been writing everything down, has written that Susie has three apples, Jonny has four apples and Amber has three apples. These numbers don’t match with the rest of the class! At this point, the class gathers together and goes through what everyone has written down and verifies that Susie has six apples, Jonny has one, and Amber has three and they still name the trade “B to C.” Nikko is able to correct his mistake and now continues to help writing down any future transactions.

In this Scenario — Susie, Jonny, and Amber are trading a value using the students to show proof of the trades. These students, along with their records and names of the trades, are what we call the blockchain. The students represent the network of computers doing the work of verifying and validating the trades. The writing down of the transactions represent the blocks of information. The names represent a unique way to identify each block. Each unique name is also known as a hash. As more trades occur, more blocks will be created with a name connecting them to a previous block — creating a chain of blocks.

Now, a more technical definition of the blockchain would be a decentralized database used to verify and validate transactions around the world. To better explain what we mean by decentralized, let’s go back to our example of the 3rd-grade classroom. Because every student in the room was recording the trades, no one student held all the answers. Instead, they all held the answers and could verify collectively that all the other students were correct. This fact — that all the students held the answer — is decentralization. No single entity has control or authority over the various transactions because the transactions are shared and validated on the network and not a sole third party.

How does the blockchain work?

To understand how the blockchain works, here’s what’s needed:

  1. A transaction: trading the apples.
  2. A transaction verification: the students writing down the trade and sharing their answer to make sure it is correct.
  3. The transaction needs to be stored: the students, having written down the answer and knowing that it is correct, make it official by keeping it on their paper to help validate future transactions.
  4. Storage needs a name: Unique names, never to be repeated are given to the transactions: A to B, B to C.

What are the advantages of the blockchain and why is it important?


Calling upon our classroom analogy again, anyone and everyone can enter the classroom and trade for apples. Everyone is on the same playing field. The blockchain doesn’t care where you’re from, who you are or what you want to do on the blockchain. You do not need to ask for permission to use the blockchain.


Blockchain puts you beyond the analogous classroom, geographic location, and fiat currency. It allows trades to happen regardless of the buyers’ location or sellers location. Buy, transfer, sell from everywhere from anywhere. Because our classroom represents so much more — its an entire global network.

No one controls it

There is no third party regulating how or when we trade apples. The trade is always being recorded by the masses for each peer-to-peer transaction. This also means there are no middlemen accruing fees because of transactions being made. You are in control of your own money and how it is used.

Resists censorship

Had we introduced a new element to our 3rd-grade classroom where someone came in and wanted to change how things were done, the classroom could have just smiled and continued on. Even if that individual tried to force their proposed change, alter, or censor it — the classroom would have to agree. Putting this on the global scale makes that near impossible.


Because it’s a public ledger (students sharing their information), after somethings been validated, you can go back and look at each block and follow the string for each and every transaction.


Transactions are fast because there are no third parties involved, you do not need to ask for permission and it’s ultimately peer-to-peer.


There are no arbitrary actions. With everything being accounted for, the intentional set process allows for streamlined activity that can be done over and over.

Enhanced Security

The natural consequence of a global network is it makes it nearly impossible for hackers to take over the blockchain. Every transaction on the blockchain must be agreed upon with the community before they are recorded. After each transaction is verified, that transaction is encrypted and linked to the previous transaction.

In Conclusion…

If you made it here, congrats! We just covered a lot of material in a brief time. To summarize, blockchain is a decentralized, global database. The 3rd-grade classroom personifies the technicality of the blockchain and how it can work because of the network validating and publicizing all the trades and transactions. Its importance stems from the freedom, control, and security over data provided to the individual and the masses.

Pssst… If you are looking for a few other good sources that can explain blockchain more, here you go:

  1. What is Blockchain? (Coindesk)
  2. Blockchain Explained. (Investopedia)
  3. How does a blockchain work-simply explained. (YouTube)