The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed ledger technology (DLT).
First proposed as a research project in 1991, the blockchain concept predated its first widespread application in use: Bitcoin, in 2009. In the years since, the use of blockchains has exploded via the creation of various cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens, and smart contracts.
Blockchain Structure and Function
Blockchain allows individuals, particularly those without mutual trust, to share data securely and without tampering. The technology records each transaction as a block of data. These transactions may involve tangible assets, such as physical products, or intangible ones, such as intellectual property.
Each block can contain key transaction details, including who was involved, what occurred, when and where it happened, how much was involved, and under what conditions.
Blocks link directly to previous and subsequent ones, forming a continuous chain. As an asset moves or changes ownership, the blockchain records the time and sequence of each transaction. The linkage between blocks prevents modification or insertion of unauthorized data. Transactions are grouped in an irreversible sequence, producing a blockchain. Each new block further verifies the earlier ones, increasing the integrity of the entire chain.
Each block includes three elements: the transaction data, a 32-bit nonce generated during creation, and a 256-bit hash that must begin with a string of zeroes. The first block uses the nonce to generate the cryptographic hash, and this combination permanently links the data to the block unless the chain is mined.
Mining and Hashing
Miners generate new blocks through a process called mining. Each block contains a unique nonce and hash, referencing the hash of the previous block. Mining is computationally demanding, particularly in long chains. Specialized software is used to solve complex equations in search of a nonce that produces an acceptable hash. With four billion possible combinations, finding the correct one adds the block to the chain.
Changing any earlier block requires re-mining that block and all blocks following it. This difficulty serves as a security measure, as the time and computing power needed to find valid hashes discourages manipulation. Once a block is mined and accepted by the network, it becomes part of the chain and the miner receives a financial reward.
Nodes and Decentralization
Decentralization is a key aspect of blockchain. No single entity controls the chain; rather, the network distributes it across many devices called nodes. Each node maintains a copy of the blockchain and participates in verifying new blocks through algorithmic consensus. As a result, blockchain operates as a shared ledger that all participants can inspect.
Each user has a unique alphanumeric ID to track transactions.
This setup, combined with transparency and independent verification across nodes, supports data integrity and fosters trust among participants. Blockchain makes it possible to scale trust using technology, without requiring third-party intermediaries.
Security and Data Integrity
Blockchain technology ensures decentralized trust and security using several mechanisms. All blocks are added in a linear and chronological sequence at the end of the chain. Once added, altering a block’s contents is nearly impossible unless a majority of the network agrees. Each block includes its hash, the previous block’s hash, and a timestamp.
Hash codes convert digital data into fixed-length alphanumeric strings using mathematical functions. Editing the original data changes the resulting hash, signaling tampering.
If a node operator attempts to modify their own copy of the blockchain, it will no longer match others in the network. This discrepancy leads to the altered version being rejected as invalid.
To successfully carry out an attack, the malicious user must control at least 51% of the network’s copies and alter them simultaneously. This type of attack would require large-scale computing resources and significant financial investment, as every block would need re-mining due to different timestamps and hash values.
Blockchain Transparency
Blockchain provides transparent access to its transaction records. In Bitcoin and similar networks, users can verify transaction histories by operating a personal node or using public blockchain explorers. Every node has a copy of the blockchain, and all copies update when new blocks are added.
Despite the possibility of anonymous activity, all transactions remain traceable. For instance, after certain exchange hacks, the stolen Bitcoin remained visible.
Although the attacker’s identity remained hidden, any future use or movement of the stolen Bitcoin could be detected. The records stored in blockchains like Bitcoin are encrypted, protecting data confidentiality while maintaining transparency.
Distributed Ledger and Redundancy
Traditional databases often rely on centralized server farms, controlled by one organization. Such systems face single points of failure — a power outage, internet disruption, fire, or malicious deletion can destroy or corrupt the data.
Blockchain distributes database records across multiple nodes in different locations. This setup adds redundancy and protects data accuracy. If someone modifies one copy, the others will reject it, preserving the correct information.
In networks such as Bitcoin, each node can compare its data with others, flag discrepancies, and maintain a verified transaction history.
This model secures transaction histories and allows blockchains to store various data types beyond cryptocurrency records — including legal agreements, state IDs, and inventory systems. The distributed structure ensures no single node can change the stored information, making the blockchain a reliable and irreversible data record.