What is a blockchain?

How blocks link together to form the ledger

Blockchain is best described as a digital ledger you and thousands of others can use at the same time. Here, each set of transfers gets written into a block, and each block points directly to the one that came before. So what you get is an unbroken chain of transaction records. Anyone running the right software can read or double-check this entire history. Imagine a shared workbook, where every new sheet carries a unique code from the last one. If someone tried to change even a single detail on an old page, the next page’s fingerprint would not match up, and the difference would stand out to anyone checking. On a blockchain, this fingerprint is created by a hash, an extremely brief but unique code calculated from what's in the block. Change a single number, and you end up with a completely different hash.

Each block typically holds a batch of payments, a timestamp, and the previous block’s hash. Once the network accepts a new block, it’s there for good. The number of blocks added since a payment or record is called its confirmations (see our separate guide). Each confirmation puts your transaction further and further in the past, out of easy reach for tampering.

The role of nodes and how the network agrees

A node just means a computer running the blockchain software with its own entire copy of the ledger. When lots of nodes are spread out among banks, companies, and individuals, you don’t need to trust just one operator’s version of the transaction history. If someone tries to rewrite a part, all the other nodes will spot the change.

When a new block is ready, nodes check every detail. Does each payment have a valid signature? Is any coin being spent twice? If the block passes the rules and network nodes agree, they add it. This group-wide agreement is called consensus. Different blockchains use different strategies for reaching consensus; the two you’ll hear about most are described in our proof of work vs proof of stake overview.

Why most blockchains are hard to rewrite or falsify

Every block on the ledger relies on the blocks beneath it, and many copies are held by different nodes. Rewriting even a single past payment or entry would force someone to redo every following block, then convince the majority of the network to accept these changes. For public blockchains with many users, this would need an unrealistic level of computing resources or money, and the attempt is clear to anyone reviewing the data.

This is what people mean when they say a blockchain is tamper-resistant. It isn’t immune to problems. Software errors, exposed private keys, and hacks against under-secured, smaller blockchains have resulted in real losses in the past. You’re responsible for the protection of your accesses and devices. If you’d like a wider view of digital currencies themselves, we’ve written an introduction to cryptocurrency as well.

Frequently asked questions