Blockchains are decentralised digital ledgers shared across multiple computers. They record changes or transactions made by users to their part of the ledger and update everyone’s ledger in tandem to ensure there is a single source of truth for the state of the blockchain at any time.
A blockchain is structured into blocks that are ‘chained’ together chronologically. Once a block is filled with transactions, it is cryptographically sealed and linked to the preceding block, creating the chain.
Every transaction or change made is verified by a network of computers through a consensus mechanism. Different blockchains have different consensus mechanisms that provide security and trust for users and reward participants using resources to validate those transactions.
Blockchains are decentralised, which means they are usually not as fast as centralised databases but typically offer other advantages, such as being free from trusted authorities and intermediaries, preventing double-spending of coins and reaching consensus in a distributed network, previously considered impossible computing problems. They do this by being radically transparent, letting users see all transactions and balances but obscuring the users behind public keys. By flipping where trust lies, trust in intermediaries is replaced with trust in the protocol.
Blockchains are typically immutable, meaning once a transaction or change has been made to the ledger, it cannot be undone, cancelled or recalled.
While blockchains have become well known due to their necessity for cryptocurrencies, the concept is increasingly being used in applications that extend beyond cryptocurrency.