This is a highly simplified explanation of Bitcoin and blockchain. I hope it can provide a general understanding of digital currency. The analogy is illustrated in Figure 1. Each cryptocurrency transaction is recorded in a block, paralleling logging transactions in a monthly ledger. Moreover, when multiple blocks are interconnected, they form a blockchain, akin to aggregating monthly ledgers into a year ledger.
Figure 1. Comparing Blockchain and Bitcoin in Real-World Terms
But you might have a question: where is Bitcoin? You can think of Bitcoin as a transaction record. As depicted in Figure 2, each colored box signifies a distinct amount of Bitcoin. For instance, TX1 represents ₿10, TX2 is ₿1, and so forth. Each spent Bitcoin can be traced back to its preceding Bitcoin transaction.
Figure 2. Diagrammatic Representation of Bitcoin Transaction Flow
You can envision, with all transactions documented on the blockchain, there's no necessity for a central authority (such as a bank) to authenticate every transaction! This is referred to as decentralization>.
As mentioned earlier, this is an exceedingly simplified explanation. For a deeper understanding of the underlying mechanism, here are some valuable resources:
1. https://learnmeabitcoin.com/
2. https://github.com/bitcoinbook/bitcoinbook
Additionally, if you have any thoughts or would like clarification on my points, feel free to leave a comment below! :)