Step 1 — Transaction data
The Bitcoin blockchain is the oldest blockchain in existence. It is a giant track record of all the Bitcoin transactions that have ever occurred, all the way back to the very first Bitcoin transaction.
Step 2 — Chaining the blocks
All the transaction data are stored in blocks. These blocks are now being linked together. To do this, every block gets a unique (digital) signature that corresponds to exactly the string of data in that block. If anything inside a block changes, the block will get a new signature through hashing.
Step 3 — How the signature is created?
In blockchain, the signature is created by a cryptographic hash function. A cryptographic hash function is a very complicated formula that takes any string of input and turns it into a unique 64-digit string of output. Any changes to the input, will render a totally different output.
Step 4 — When does the signature qualify, and who signs a block?
A block will only be accepted on the blockchain if its digital signature starts with a consecutive number of zeroes. the string of data of a block needs to be changed repeatedly until a specific string of data is found that leads to a signature starting with ten zeroes. The process of repeatedly changing the nonce to find an eligible signature is called mining and is what miners do.
Step 5 — How does this make the blockchain immutable?
Millions of users are mining on the Bitcoin blockchain, and therefore it can be assumed that a single bad actor or entity on the network will never have more computational power than the rest of the network combined, making the blockchain immutable.
Step 6 — How is the blockchain governed?
The blockchain protocol does this automatically by always following the record of the longest blockchain that it has, because it assumes that this chain is represented by the majority