How blockchain technology works and why you should care

In Innovation

Blockchain is the technology behind digital currency Bitcoin and allows suppliers and consumers to share decentralized digital transaction records across a network of computers without the need for a central authority.

The technology which is already being used in Kenya but informally can involve assets in various forms i.e financial, legal, physical or electronic.

The unique thing or the driving force behind the technology is that no single party has the power to tamper with the records which improves and transparency and integrity.

How blockchain works

  • Kinyanjui wants to send money to Amina
  • Kinyanjui uses his digital wallet to send money to Amina
  • The blockchain app stamps the transaction with Kinyajui’s signature.
  • This transaction now needs to be verified by blockchain.
  • Kinyanjui’s is transaction is grouped with other transactions that happened at that time making a block.
  • The block has a unique ID, transaction time and the ID of the previous block in the chain.
  • The block containing Kinyanjui’s transaction is then broadcast to the entire network to be verified.
  • After verification the block is added to the head of the blockchain forming a permanent and transparent record of transactions.
  • After the verification, Amina receives money from Kinyanjui.

Why you should care.

Despite a warning from central bank of Kenya late last year warning the public against the use of Bitcoins, the statement was largely seen by stakeholders as retrogressive and the technology has taken root among Kenyans and central banks and technology companies around the world are working to make the technology behind Bitcoins work for them and Kenya already has its own version, Bitpesa.

READ: Risks and opportunities in year of elections

The technology can be used to deliver transparent elections, reduce currency manipulations when used as currency, it can be to for payment of goods and services and many other possibilities.


Offcourse it comes embedded with its own risks such as exposure to cyber security threats and issues of storage space.

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