The rise of blockchain technology over the past decade is not simply a financial phenomenon but also a revolution in trust infrastructure in the digital era. According to analysis from experts at Tan Phat Digital, in essence, blockchain is an information storage and transmission protocol based on a decentralized ledger, where transparency, security and immutability of data are guaranteed by cryptographic algorithms and consensus mechanisms without the presence of any central authority. The shift from the traditional centralized model to a distributed model has opened up unprecedented possibilities in managing digital assets, executing smart contracts, and building autonomous economic ecosystems. As Vietnam moves towards implementing the Digital Technology Industry Law by 2026, a thorough understanding of the operating process from the individual transaction level to the blockchain structure becomes an urgent requirement for policymakers, system engineers and market participants.
History: From the Idea of the Security Log to the Global Ledger
Although the term blockchain is often associated with its birth of Bitcoin in 2009, but its theoretical cryptographic foundations were laid in the early 1990s. In 1991, researchers Stuart Haber and W. Scott Stornetta sought to solve the problem of digital document authentication through a chain of hash-secured data blocks, which prevents the document's timestamp from being altered. By 1992, the system was optimized by integrating a Merkle tree structure, allowing multiple documents to be grouped into a single block while effectively ensuring data integrity.
The late 1990s saw the emergence of important predecessor concepts such as Nick Szabo's BitGold, which introduced the use of the Proof-of-Work algorithm to solve cryptographic problems in the network peer. However, it was not until October 31, 2008, when an individual or group under the pseudonym Satoshi Nakamoto published the white paper "Bitcoin: A peer-to-peer electronic cash system", that blockchain was truly realized as a complete solution to the problem of double-spending without the need for an intermediary.
The Bitcoin network launched its genesis block on January 3, 2009, marking the era Blockchain is a financial transaction ledger. The second wave began in 2014-2015 with the birth of Ethereum by Vitalik Buterin, who expanded the capabilities of blockchain from a mere ledger to a World Computer through Turing-complete smart contracts. This allows blockchain to be applied in a variety of fields from decentralized finance (DeFi) to identity governance and supply chains.
Important milestones in Blockchain history:
1991 (Stuart Haber & W. Scott Stornetta):Introduction of hash-secured Append-only logs.
Year 1992 (Merkle Tree Integration): Increases efficiency in validating bulk data in blocks.
1994 (Nick Szabo): Proposes the first Smart Contracts concept.
1998 (BitGold Proposal): Uses Proof-of-Work mechanism and hash links as cryptocurrency platform.
Year 2008 (Satoshi Nakamoto): Announced the Bitcoin white paper, completely solving the double spending problem.
Year 2009 (Genesis Block): The first Bitcoin block was mined, officially putting the network into operation.
Year 2015 (Ethereum Mainnet): Introducing the Ethereum virtual machine (EVM) and decentralized applications (dApps).
2026 (Vietnam CNCNS Law): Formalizing the legal status for digital assets in the Vietnamese market.
The Three Core Technical Pillars of Blockchain
Blockchain architecture operates based on the intimate intersection of three fields: cryptography, Peer-to-peer networks and game theory. Tan Phat Digital determines that each of these pillars plays a vital role in maintaining the security and stability of the system.
Pillar 1: Cryptography
Cryptography is a protective layer, ensuring that data in the blockchain cannot be changed and ownership of assets is unique. The two key components are hash functions and digital signatures. The SHA-256 hash function is widely used due to its one-way nature and strong collision resistance: any small change in the input data will result in a completely different output hash code sequence.
Digital signatures, often based on the ECDSA algorithm on the secp256k1 curve, allow users to securely perform transactions. This process is based on public key cryptography, where a key pair (private key and public key) is generated. The private key is used to sign the transaction, while the public key allows the network to verify that signature without knowing what the private key is.
Pillar 2: Peer-to-Peer Network
Different from traditional client-server architecture, blockchain operates on a network of many peer-to-peer nodes, where each node keeps a full copy of the ledger. When new information is added, it is propagated through the network to update nodes. This structure eliminates centralized weaknesses and makes the system extremely resilient to attacks or outside interference.
Pillar 3: Consensus Mechanism
The consensus mechanism is the set of rules that nodes in the network must follow to agree on the current state of the ledger. This is where game theory is applied to encourage participating parties to act honestly. In the Proof of Work (PoW) mechanism, miners must spend computing power to solve difficult cryptographic problems. In contrast, Proof of Stake (PoS) replaces energy consumption by locking up an amount of digital assets as collateral, helping to save energy and increase scalability.
Detailed Process: From Transaction to Block and Chain
The operation of blockchain is not an instantaneous event but a series of strict authentication steps systematized by the Tan Phat Digital team as follows:
Step 1: Initialization and Signing a Transaction
Every process begins when a user initiates a transaction containing the sender address, recipient address, asset amount, and transaction fee. The sender uses his private key to create a digital signature using the ECDSA algorithm, ensuring message integrity.
Step 2: Propagation and Mempool
The transaction is sent to nodes in the network for preliminary verification. If valid, the transaction will be put into the Mempool (memory waiting area), where it waits to be selected by miners or validators into the next block.
Step 3: Assemble into a Candidate Block and Merkle Tree Structure
Transactions in the block are organized according to a Merkle Tree structure. This binary tree structure hashes transactions into leaf nodes and combines them until reaching the Merkle Root located in the block header. This helps nodes validate transactions extremely quickly without needing to download the entire data.
Step 4: Solve the Consensus and Mining Problem
For PoW networks, miners must find the nonce number for the block header hash to meet certain conditions, a process that requires enormous computing power. In the PoS network, validators are randomly selected based on stake to propose and endorse new blocks.
Step 5: Link the Chain and Disperse the Whole Network
The new block after confirmation will be added to the end of the chain. Each block contains the hash of the previous block (Previous Hash), creating an unbreakable link. The block is then propagated so that all nodes update their ledgers, making the transaction part of the immutable history.
See also: Transaction ID (TxID) is What?
In-Depth Analysis of Blockchain Models
Depending on performance and privacy needs, Tan Phat Digital classifies blockchain into three main models:
1. Public Blockchain
Participation rights: Free, anyone can participate without permission.
Transaction speed: Low due to the need for large-scale consensus.
Transparency: Completely public, every transaction is traceable.
Consensus mechanism: Uses competitive PoW or PoS.
Operating costs: High (transaction fees paid to the global network).
2. Private Blockchain
Participation rights: Limited, only authenticated internal members allowed.
Transaction speed: Very high thanks to small number of nodes and centralized control.
Transparency: Strictly limited, only authorized members can access see.
Consensus mechanism: Directly assigned by the governance organization.
Operating costs: Low thanks to small scale network and simple operation.
3. Blockchain Consortium (Consortium Blockchain)
Participation rights: Predetermined group of organizations jointly managed.
Transaction speed: High, suitable for inter-organizational transactions.
Transparency: Limited to the scope of participating alliances.
Coordination mechanism agreement:Agreeed and enforced between member parties.
Operating costs: On average, shared among participating organizations.
Mathematics: ECDSA Algorithm and Security
The ECDSA algorithm uses the mathematics of Elliptic curves to protect user assets. The standard equation used in Bitcoin and Ethereum is $y^2 = x^3 + 7 \pmod p$. The key generation process is based on choosing a random number as the private key and performing point multiplication on the curve to find the public key. The discrete logarithm problem on the Elliptic curve makes finding the private key from the public key impossible with current technology, ensuring absolute safety for users.
See more: What is Proof of Work (PoW)?
Advanced Security and Scaling Technology: ZK-Rollups and Layer 2
To solve the problem of congestion, Layer 2 solutions 2) as Rollups was born. In it, ZK-Rollups uses Zero-Knowledge Proof (ZKP) to validate thousands of off-chain transactions and send a cryptographic summary back to the main chain. This technology brings two great benefits: enhanced privacy (no disclosure of transaction details) and outstanding scalability (reducing the computational load on the original chain).
Vietnam Blockchain Ecosystem and 2026 Legal Framework
Vietnam is asserting its position with businesses such as Sky Mavis (Ronin Network) or Ninety Eight (Coin98). In particular, the Vietnam Blockchain Multi-Chain Service Network (VBSN) initiative is becoming an important national infrastructure with a processing speed of up to 300,000 TPS, supporting traceability and public data management.
The biggest turning point will take place on January 1, 2026 when the Digital Technology Industry Law officially takes effect. Digital assets will be recognized as legal assets, allowing investment and exchange activities to be protected by law. However, the law also requires strict compliance with anti-money laundering regulations. Spontaneous peer-to-peer (P2P) transactions will face high legal risks, requiring users to migrate to mainstream platforms with clear KYC regulations.
See more: What is Proof of Stake (PoS)?
5 Typical Case Studies in Vietnam
To demonstrate the power of technology, Tan Phat Digital synthesizes 5 real application cases economy helps solve difficult problems of the Vietnamese economy:
1. Traceability of Buon Ma Thuot CoffeeA typical project in Dak Lak has applied blockchain to record the journey of coffee beans from the farm to the finished cup of coffee. Information about varieties, roasting processes, and quality standards are encoded into the QR Code attached to the product. This not only creates absolute trust for consumers but also helps farmers optimize profits and expand export doors to demanding markets.
2. Management of digital diplomas and certificates (PTIT-CERT)In order to solve the problem of fake degrees, the Posts and Telecommunications Institute of Technology has developed the PTIT-CERT solution based on blockchain. Every certificate issued has a unique ID or QR code for employers to instantly compare on a decentralized ledger. This system ensures that learning data is immutable, helping students easily transfer schools or apply for international scholarships without having to go through cumbersome document verification procedures.
3. Electronic medical record sharing system Medical facilities in Vietnam are piloting a medical record management system on blockchain to help connect data between hospitals. Patients have the right to control and share their medical records with different doctors without having to repeat duplicate tests, thereby reducing medical examination and treatment costs and improving diagnostic accuracy.
4. Land management on the VBSN platform Vietnam Blockchain Multi-Chain Service Network (VBSN) is currently implementing transparent land management models. Data on ownership and land transaction history are stored on Layer-1 of VBSN with a processing speed of 300,000 TPS, helping to eliminate risks of disputes, falsifying red books and increasing management efficiency for state agencies.
5. Web3 Games and the Ronin Ecosystem (Sky Mavis)The most successful case in the commercial field is Sky Mavis with the game Axie Infinity. By building the Ronin network – a dedicated gaming blockchain, Sky Mavis has created a platform that allows millions of users to safely and quickly trade digital items (NFTs). The company's revenue in 2024 largely comes from staking activities and on-chain transaction fees on this ecosystem.
10 Frequently Asked Questions about Blockchain (FAQ)
1. What exactly is Blockchain and why is it safe? Blockchain is a decentralized digital ledger that records every transaction in a transparent way. It is secure thanks to a combination of cryptography (the hash code linking blocks) and a mechanism to distribute data across thousands of computers, making data tampering nearly impossible without controlling the majority of the network.
2. From 2026, can I use Bitcoin to buy goods in Vietnam? No. According to the Technology Industry Law No. 2026, virtual assets (such as Bitcoin) are only allowed to be used for exchange or investment purposes, and are not recognized as legal means of payment. Using virtual currency to pay for goods is still considered illegal.
3. What legal risks do P2P (peer-to-peer) transactions have from 2026? P2P transactions pose a high risk of money laundering and tax evasion. When the new Law takes effect, P2P participants may have their bank accounts blocked or criminally prosecuted if they accidentally become a link in illegal activities, even without intention.
4. What is the VBSN network and how does it help Vietnamese businesses? VBSN is a national blockchain infrastructure whose core technology is 100% owned by Vietnam. It helps businesses create applications such as traceability of agricultural products, certificate management and digital identification at low costs and processing speeds of up to 300,000 TPS.
5. What effect does the hash function have in a blockchain block? The hash code acts as a unique digital "fingerprint" of a block. Each new block contains the hash of the previous block, forming the chain link. If data in a block is altered, the hash will change color and corrupt all subsequent blocks, helping to detect fraud immediately.
6. What is ZK-Rollups and why is it important for scalability? ZK-Rollups is a Layer 2 solution that pools thousands of transactions for off-chain processing, then sends a cryptographic proof (ZKP) back to the main chain. This reduces congestion, lowers transaction fees, and increases confirmation speeds while still maintaining high security.
7. What is the difference between Proof-of-Work (PoW) and Proof-of-Stake (PoS)? PoW requires miners to use computing power to solve cryptographic problems (like Bitcoin), while PoS selects validators based on the amount of assets they "stake" (lock) in the network. PoS is more energy efficient and has better scalability than PoW.
8. Should I choose public or private Blockchain for my business? Depending on needs: Public Blockchain is suitable for applications that need absolute transparency and decentralization. Private Blockchain is suitable for internal businesses that need high security, access control and fast processing speed.
9. What benefits does real asset tokenization (RWA) bring to the economy? RWA helps digitize assets such as real estate and bonds for more flexible transactions on the blockchain. This helps remove capital "bottlenecks", speed up capital turnover and open up new capital mobilization channels for the real economy.
10. What are the conditions to establish a digital asset exchange in Vietnam? From 2026, the barrier to entering the market will be very high to ensure safety. Exchanges can require a minimum charter capital of up to 10,000 billion VND and must strictly comply with KYC (identity authentication) and anti-money laundering regulations.
Blockchain is not only the technology of digital currency but the foundation for a transparent and effective digital society. Understanding the technical processes from hash codes to consensus mechanisms will help individuals and businesses seize opportunities when the 2026 legal framework comes into effect. With the companionship of Tan Phat Digital, we believe that mastering technology and complying with the law will be the golden key to breakthrough in the upcoming digital asset era.
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