What is a blockchain?

A ledger everyone can check

A blockchainBlockchain A shared, append-only record of transactions that many independent computers keep in sync. is a list of records, grouped into blocksBlock A batch of transactions added to a blockchain at one time., that many independent computers (nodesNode A computer that keeps a copy of a blockchain and checks that new transactions follow the rules.) store and verify. Each block contains a cryptographic fingerprint (a “hash”) of the previous block. Change anything in an old block and its fingerprint changes, breaking every link after it. Tampering is obvious.

Who decides what gets added?

Because there’s no central administrator, the network needs rules for agreeing on the next block. That’s the consensus mechanismConsensus mechanism The method a blockchain's computers use to agree on which transactions happened, and in what order.. The two most common are proof of workProof of work A consensus method where miners spend computing power to earn the right to add the next block. (Bitcoin) and proof of stakeProof of stake A consensus method where validators lock up coins as collateral for the right to add blocks. (Ethereum). We compare them in the next lesson.

What blockchains are good at

• Keeping a tamper-evident history that no single party controls.
• Letting strangers transact without trusting each other or a middleman.
• Running shared programs (smart contractsSmart contract A program stored on a blockchain that runs automatically when its conditions are met.) with predictable rules.

What they’re not good at

Blockchains are slower and more expensive than ordinary databases, on purpose. Redundancy and verification are the price of not needing to trust anyone. If a system already has a trusted operator, a blockchain often adds cost without much benefit.