In the simplest terms, blockchains as described in the topic use data on a shared basis. Think of it this way: in a school, we all know who the big bad bully is.
What we don’t know however is his last victim. We can, however, know the last victim by contacting previous victims and their friends who have served as witnesses.
We can then pick out who he (or she!) is, what he or she has done and most importantly the last victim! It is the consensus of the information that is important. Blockchains function in a similar capacity.
To fully understand how this works, you’d have to understand that blockchain technology isn’t an entirely new concept. The concept of peer-to-peer sharing of information has been around since the 70s at least. It’s how the information is shared that’s different.
This is where Satoshi’s whitepaper made a big difference. The use of a public ledger where this information is stored and verified is what keeps the integrity of each chain.
In essence, we can think of blockchains as a kind of database but with major differences from legacy systems. Each block contains data that becomes immutable once entered. In the future, blockchain models may change and the data may be corrected or changed.
For now, though, this isn’t so.
All data is formed in blocks. These blocks form a series of chains. Confirmation of this data is done either through proof of work or proof of stake.
Proof-of-work is when a series of cryptographic calculations are made to verify each block that will exist on the public ledger. Miners confirm this and are rewarded with tokens. This is the case for the big cryptocurrencies.
Bitcoin is a perfect example. In Proof-of-stake, tokens are stake and depending on the algorithm, a winner or winners are chosen and rewarded for confirming data entered into the public ledger.
The parties that confirm this are usually called nodes within the blockchain ecosystem. They are kind of like the friend to the victims in the example given. They confirm the transactions and build a clear picture of what exactly is going on. This is how blockchains use data!