What is a blockchain?
Strip away the hype and a blockchain is a record book with two unusual features: everyone keeps a copy, and tampering with old pages shows.
On this page
- A blockchain is a digital ledger shared across many computers, usually without a central authority deciding what goes in it.
- Transactions are grouped into blocks, and each block carries a fingerprint (hash) of the block before it.
- Changing any old block changes its hash and breaks every later link, which is why blockchains are tamper-evident.
- A consensus method, such as proof of work or proof of stake, decides who adds the next block.
- NIST stresses that blockchain is not a fit for every problem; a normal database is often simpler and cheaper.
A blockchain is a shared digital ledger. Transactions are bundled into blocks, and each block includes a cryptographic fingerprint of the previous one, forming a chain. Many computers keep copies and agree on new blocks, so rewriting history is very hard and easy to detect.
What problem does a blockchain solve?
Any ledger has to answer one question: who is allowed to write in it? Normally the answer is a single trusted party, such as a bank, a land registry or a payment company. That works well until people do not trust the record keeper, or there is no obvious one.
The Bitcoin white paper set out to remove that trusted party from online payments. Its challenge was double-spending: with digital money, what stops someone from sending the same coin to two people? The answer was a public history of transactions that everyone can check and nobody can quietly edit. That history is the blockchain.
NIST, the US standards agency, gives a careful definition in its 2018 overview: blockchains are tamper evident and tamper resistant digital ledgers implemented in a distributed fashion (i.e., without a central repository) and usually without a central authority. Each part of that sentence matters, and the rest of this guide unpacks it.
How are blocks chained together?
A block is a batch of transactions plus a short header. According to NIST, the header typically holds the block's height, a timestamp, a summary hash of the block's data and, crucially, the hash of the previous block's header.
A hash function turns any input into a fixed-length fingerprint. SHA-256, one widely used hash function, always outputs 256 bits, written as 64 hexadecimal characters. Change the input even slightly and the fingerprint changes completely.
Because every block records the fingerprint of the one before, changing an old block breaks the link to the next block, which breaks the link after that, all the way to the newest block. That chain reaction is what makes tampering visible.
Who decides which block comes next?
If thousands of computers keep copies, they need a rule for agreeing on the next block. That rule is called a consensus mechanism. NIST describes several; two dominate public networks.
- Proof of work. Computers compete to solve a costly puzzle; the winner publishes the block. The Bitcoin white paper describes this as finding a value whose hash starts with a required number of zero bits. It is expensive to produce and cheap for everyone else to verify.
- Proof of stake. Participants lock up the network's coin as collateral and are chosen to propose blocks. On Ethereum, time is divided into 12-second slots, and one validator per slot is picked to propose a block.
We compare the two in depth in proof of work vs proof of stake. The computers that store and check the ledger are called nodes.
Are all blockchains public?
No. NIST splits blockchains into two families, and the difference shapes almost everything else.
| Question | Permissionless | Permissioned |
|---|---|---|
| Who can read and write? | Anyone | Only approved participants |
| Who publishes blocks? | Anyone who meets the consensus rules | Selected, known parties |
| Typical consensus | Proof of work or proof of stake | Lighter methods such as round robin or proof of authority |
| Speed and cost | Slower, costlier, built to resist bad actors | Usually faster and cheaper |
| Examples | Bitcoin, Ethereum | Business consortium ledgers |
Public cryptocurrencies such as Bitcoin and Ethereum are permissionless: you do not need anyone's approval to run a copy or send a transaction.
When is a blockchain the wrong tool?
NIST's overview spends real space on limits, which is unusual for a technology primer. Its main cautions, in plain terms:
- Immutability is relative. Old blocks are hard to change, not impossible. A party controlling enough of the network's resources could rewrite recent history.
- Not every problem needs it. If one organization already runs the system and users trust it, a normal database is simpler.
- People still govern it. Rule changes are made by humans; when they disagree, a network can split in a fork.
- Resources. Proof-of-work networks consume large amounts of electricity.
What mistakes do beginners make about blockchains?
- Thinking "on the blockchain" means safe. The ledger can be sound while the app, exchange or token on top of it is not.
- Assuming a blockchain is anonymous. Bitcoin.org notes that all transactions are stored publicly and permanently, and anyone can see an address's balance and history.
- Expecting instant finality. On Bitcoin, a payment becomes harder to reverse as more blocks are added on top. Bitcoin.org suggests waiting for more confirmations for larger amounts.
- Confusing the chain with the coin. A blockchain is the record; a cryptocurrency is one thing recorded on it. See what is cryptocurrency.
Questions readers ask
Is a blockchain the same as Bitcoin?
No. Bitcoin uses a blockchain to record payments, but the idea of a blockchain is broader. Ethereum and many other networks run their own blockchains with different rules.
Can a blockchain be hacked?
Rewriting a large public blockchain's history is extremely costly, but not impossible in theory. Most real-world losses come from hacked exchanges, wallets, bridges or smart contracts built on top of the chain.
Where is a blockchain stored?
On many independent computers called nodes. Each keeps a full or partial copy and checks new blocks against the rules.
What is a block explorer?
A website that lets you search a public blockchain by address, transaction or block. Learn more in our block explorer entry.
A blockchain is a ledger designed for situations where no single record keeper is trusted. Hash links make edits visible, and consensus rules decide who writes next. It is a powerful tool for that narrow job, and an expensive one for jobs a normal database already does well.
Sources
- National Institute of Standards and Technology, NIST IR 8202: Blockchain Technology Overview (2018)Primary source
- Satoshi Nakamoto (bitcoin.org), Bitcoin: A Peer-to-Peer Electronic Cash System (2008)Primary source
- ethereum.org, Blocks (2025)Primary source
- bitcoin.org, Frequently Asked Questions (2024)Primary source
- bitcoin.org, Some things you need to know (2024)Primary source
Educational content only — not financial, investment, legal or tax advice. Crypto-assets are high-risk and you could lose all the money you put in. Rules differ by country; check with your national regulator. See our risk disclosure and editorial policy.
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Hash function
The fixed-length fingerprint behind blocks, addresses and mining.
