Blockchain
In simple terms
A blockchain is like a shared notebook that many people keep copies of, where everyone records transactions and agrees on what's written. Once something is written down, it can't be erased or changed.
Definition
A public digital ledger that records transactions across many computers.
In depth
A blockchain is a distributed ledger maintained across a network of nodes, where transactions are grouped into blocks and cryptographically linked together using hash functions. Each block contains a reference to the previous block, creating an immutable chain. Network participants reach consensus through mechanisms like Proof of Work or Proof of Stake to validate new blocks, ensuring no single entity can alter historical records without network detection.
How does Blockchain work?
A blockchain is a database that only appends. Transactions are broadcast to nodes, each of which keeps a copy of the history. Pending transactions are gathered into a block, and the block is stamped with a hash — a fixed-length fingerprint of its contents that also includes the previous block's hash. That chaining is what makes tampering visible: altering an old record changes its hash, which breaks every hash after it. Nodes agree on which block comes next through a consensus rule such as proof of work or proof of stake, and once accepted the block is appended to every copy.
An example
Illustrative scenario. A transfer is submitted at 10:00. It waits in a pool of pending transactions until it is included in a block, which may take seconds or minutes depending on the network. That block references the hash of the one before it. Anyone can look the transaction up by its identifier on a public block explorer and see the amount, the addresses involved, and how many blocks have been added since — each one making the record harder to change.
Figures are illustrative only.
What beginners get wrong
- Public blockchains are transparent, not anonymous; addresses are pseudonymous and activity can often be linked back to a person.
- 'Blockchain' and 'cryptocurrency' get used interchangeably, but the chain is the record-keeping system and a coin is one thing recorded on it.
- Data on a chain is hard to alter, which says nothing about whether it was accurate when written; a false entry stays there permanently.
- Not every chain is decentralized — some are run by a small set of permissioned nodes, which changes who can censor or reverse entries.
Related terms
Part of
What is cryptocurrency, and how does it work? — the subject page for cryptocurrency basics, with all 23 of its definitions in one place.
Educational only — not financial advice.