A blockchain is a record of transactions — a ledger — that is copied across many computers and kept identical on all of them. Instead of one bank holding the official list of who owns what, the list is public and maintained by a whole network. That single design choice is what makes cryptocurrencies possible.
The "blocks" and the "chain"
Transactions are bundled together into a block — think of it as one page of a notebook. Every so often (about every 10 minutes on Bitcoin, every few seconds on many others) a new block is finalised and added to the end.
Here's the clever part. Each block contains a hash — a short fingerprint — of the block before it. Change anything in an old block and its fingerprint changes, which breaks the next block's reference, which breaks the one after that. To rewrite history you'd have to redo every block since, faster than the entire rest of the network combined. In practice, that's not feasible. This is why the chain is often called immutable.
Who keeps the copies? Nodes.
A node is simply a computer running the network's software and storing a copy of the ledger. Anyone can run one. Nodes share new transactions and blocks with each other, and they independently check that every rule was followed — no coins created from nothing, no spending money you don't have, valid signatures only. A block that breaks the rules is rejected by honest nodes, no matter who produced it.
How does everyone agree? Consensus.
If thousands of nodes are all adding to the same ledger, how do they agree on the one true version? Through a consensus mechanism. The two you'll hear about most:
- Proof of Work (PoW): computers compete to solve a hard math puzzle; the winner proposes the next block and earns a reward. Redoing history would mean out-computing the entire network. Bitcoin uses this.
- Proof of Stake (PoS): participants lock up (stake) coins for the right to validate blocks; cheat and your stake gets slashed. It uses far less energy. Ethereum and most newer chains use this.
Both answer the same question — how do we make lying more expensive than being honest? — with different tools.
What a blockchain is not
- It's not anonymous. Most blockchains are public and pseudonymous: addresses aren't your name, but every transaction is visible forever.
- It's not free to use. Adding data costs a fee (often called gas) that pays the people securing the network.
- It's not reversible. There's no "undo" and usually no support line. Send to the wrong address and it's gone.
Why this matters for you
Everything else in crypto is built on top of this base. Smart contracts are programs stored in these blocks. Wallets are just tools for signing transactions that nodes will accept. Tokens are entries in a ledger. Once the ledger makes sense, the rest is far less mysterious.
Next up: see how programmable ledgers work in How smart contracts work, or learn who really controls the coins in Keys & signatures.