What is block chain and how does it work?

In short;

 

Block chain is blocks of transaction logs that are distributed to random (semi random) group of participants, and securely locked, encrypted using ¬†network’s participants computation power.

Bitcoin uses this technology to keep Bitcoin safe, trust worthy.

There is a reward in finding the best and the most secure encryption within the participants group.  People who participate and use their computation power to encrypt is called Miners, and in Bitcoin they can earn 25 bit coins for encrypting these transaction logs.

There is no central bank or computer or person that manages these block, it’s distributed and stored on nodes.