Blockchain

A blockchain is a database copied across many computers, called nodes, rather than held by a single organisation. Transactions are collected into blocks, and each block contains a cryptographic fingerprint, or hash, of the previous one, forming a chain. Changing an old entry would change its hash and break every later link, so tampering is easy to spot. The network agrees which new block is valid through a consensus mechanism: proof of work, used by bitcoin, rewards participants who expend computing power, while proof of stake selects validators according to the cryptocurrency they have locked up as collateral.

Public blockchains let anyone read the ledger and take part, which makes cryptocurrencies, stablecoins and DeFi possible without a central operator. Private or permissioned blockchains restrict access and are used by some businesses and financial institutions for settlement and record-keeping. A blockchain guarantees only that records follow the network’s rules once written; it cannot guarantee that the information entered is true, that a project is honest or that a token has value. A transaction sent in error usually cannot be reversed. Crypto assets built on blockchains are high risk and can lose all their value, whatever the merits of the underlying technology.