If we go by the definition, Blockchain is an online public ledger where records about transactions in the form of blocks are arranged in a secured and time-denominated series and executed by anonymous systems working in a peer-to-peer network setup. You have a trading account in a cryptocurrency and similar to your passbook, all your transactions are digitally recorded by the blockchain using data structure.
Now, the next question might be why is it so significant here?
If you are a once-in-a-while trader or miner doing a cryptocurrency related action occasionally, or a regular with the digital currency platform, the transformation that blockchain can do to your crypto history, present and prospects is worthwhile the mentioning.
Take the first case where you do the crypto-based transaction as a rare event based on the necessity or as a hobby. Yes, you can record it like the bank passbook, but chances are that you miss out at times the procedure, your passwords or the benefits. Uncompromised security cannot be guaranteed either since the records are not in constant check and technology-competent.
In the second case, which is the majority, the frequent pass book entry or personal record-keeping becomes a tremulous task in itself increasing the probabilities of erring and security breaches. Additionally, there is a limitation to the details you can store in the nearly continuous transactions. The selection of the trading platform may not bother you since a genuine Ethereum Code review can save your preliminary effort. However, storing hierarchical digital data, decentralized and anonymous control, protection from third party access, peer-to-peer distribution system etc can reach you only through the blockchain technology. Your transaction is safe, effectively managed and provided to you in the most foolproof method.
How does it work technically?
Take the example of cryptocurrencies, you are transferring the ownership rights to a second address using the public and private key matching. This confirms the identity and security required for the digital transaction through a digital signature. Then comes the peer-to-peer distributed network protocol. The transaction, with its timestamp, preceding cryptographic hash and the signature is verified by all the concerned nodes in the network in an anonymous way so that a third-party cannot access the data. This record enters the database-like blockchain as a single and permanent block to which subsequent blocks are attached in the same procedure.
The decentralized mass distribution protocol ensures that each transaction is unique and is not repeated and if altered in any way, the change is reflected in all other blocks in the network.