What Is a Blockchain?

A blockchain is a type of digital ledger used to record transactions in a way that is transparent and difficult to alter.

Instead of being stored in one central location, copies of the ledger are shared across many computers on a network.

How a blockchain works

When a transaction is made, it is grouped with other transactions into a block.

That block is then verified by the network according to predefined rules. Once verified, the block is added to a chain of previous blocks, creating a continuous record of activity.

Each new block references the one before it, which helps prevent past records from being changed without detection.

Why blockchains are distributed

Traditional databases are often controlled by a single organization.

Blockchains distribute copies of the ledger across many participants. This distribution reduces reliance on a central authority and makes the system more resilient to outages, errors, or manipulation.

What blockchains do — and don’t do

Blockchains can:

• Record transactions in a transparent way
• Allow participants to verify activity independently
• Reduce the need for intermediaries in certain systems

Blockchains do not:

• Guarantee profits
• Eliminate all risk
• Prevent all forms of fraud
• Replace the need for user security practices

Blockchains and cryptocurrency

Cryptocurrencies use blockchains to track ownership and transaction history.

The blockchain does not store personal information. Instead, it records transactions associated with cryptographic addresses.

Different cryptocurrencies may use different blockchain designs depending on their goals and trade-offs.

Key takeaway

A blockchain is a shared record that helps participants agree on what has happened without relying on a single authority.

Understanding blockchains makes it easier to understand wallets, transactions, and self-custody.

Next lesson

Blockchains are one way to keep records without a central authority.

The next lesson explains the broader concept behind this idea and how shared records work across multiple participants.

Read: Distributed Ledger →