How Blockchain Technology Processes Transactions

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Blockchain technology in Kenya is gaining wider use as organisations and innovators adopt secure digital systems to record, verify, and store data.

The technology operates as a decentralized and immutable digital ledger that stores information in linked “blocks,” creating a permanent and tamper-resistant chain of records.

This structure supports blockchain technology without depending on a central authority. Instead, the process relies on a network of computers that collectively authenticate and validate every transaction.

A blockchain is designed so that each new block contains a cryptographic hash of the previous one. This feature makes it difficult to alter past records because modifying one block would require changing all the blocks that come after it.

The ledger is shared across a peer-to-peer network, meaning all participants maintain a synchronized copy.

These characteristics (decentralization, immutability, cryptographic security, and consensus) have contributed to the rise of blockchain technology applications in Kenya across finance, supply chains, public services, and creative industries.

Blockchain transactions follow a structured process that ensures accuracy and transparency. It begins with transaction initiation, where a user creates a digital transaction specifying details such as the recipient and the amount.

The user then signs the transaction using their private key, which acts as a digital signature proving authorization and ownership.

The next stage is broadcasting. After signing, the transaction is sent across the peer-to-peer network to multiple computers known as nodes. These nodes run blockchain software that allows them to receive, check, and store incoming requests.

Once the transaction reaches the network, the verification stage begins. Every participating node independently confirms the transaction using cryptographic rules.

Nodes check that the sender has sufficient funds and ensure there is no attempt at double spending. This step forms the foundation of blockchain’s security.

After verification, the transaction is placed into a new block alongside others that have passed the same checks. This phase, known as grouping into a block, packages the data together with a unique cryptographic hash and the hash of the previous block in the chain.

The network must then agree on the block’s validity through a consensus mechanism, such as Proof of Work (PoW) or Proof of Stake (PoS). Consensus ensures that all nodes accept the same version of the ledger. Once consensus is achieved, the block is added to the existing chain and becomes part of a permanent, time-stamped record.

The final stage is immutability. Once the block is added, the transaction cannot be changed or deleted. Altering it would require modifying every block that comes after it and gaining the agreement of the majority of the network, which is considered impractical due to the computational effort involved.

Blockchain technology applications in Kenya continue to expand as different sectors incorporate the system into their operations.

In financial services, blockchain supports cross-border payments by reducing intermediaries, lowering costs, and improving transaction speeds. It also powers decentralized finance (DeFi) platforms that facilitate lending and borrowing without traditional financial institutions.

In supply chain management, blockchain allows businesses to track goods, from farm produce to manufactured products, at every stage. This improves traceability, reduces fraud, and can automate payments through smart contracts.

In public services, various agencies have explored the use of blockchain to improve the management of land records and property registration. The aim is to reduce errors and ensure that records remain secure and tamper-proof.

Kenya’s creative industry has also adopted blockchain through non-fungible tokens (NFTs), allowing artists to authenticate and monetize their digital work.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.