What Is Blockchain and How Does It Work?

A blockchain is a shared, append-only record of transactions that many independent computers keep in sync. New entries are grouped into blocks, and each block stores a cryptographic hash of the block before it, so changing a past entry would break every later link. Bitcoin and Ethereum both run on public blockchains.

A blockchain is a shared digital record, or ledger, that many computers hold copies of and update together. Instead of one bank or company keeping the master copy, every participant can check the same history of transactions. Bitcoin, Ethereum and most other cryptocurrencies run on blockchains.

This guide explains how blocks, hashes, nodes and consensus fit together, where the idea came from and what else blockchains are used for. Network facts are as of September 2026. If you are new to crypto, start with What is cryptocurrency? Bitcoin was the first blockchain network; to check what bitcoin costs today, see the Bitcoin price and payment options.

What is a blockchain?

A blockchain is a database that is copied across a network of computers and can only be added to, not edited. NIST, the US standards agency, describes blockchains as “tamper evident and tamper resistant digital ledgers” that run without a central repository and usually without a central authority.

Think of a notebook that thousands of people hold identical copies of. New pages can be added at the end, but nobody can quietly rewrite an old page, because everyone else’s copy would no longer match. Each page is a block.

On a cryptocurrency blockchain, the entries are transactions between addresses. Because every full copy holds the whole history, the network can check that nobody spends the same coins twice. Solving this “double-spending” problem without a trusted middleman is what the 2008 Bitcoin whitepaper set out to do.

How does a blockchain work?

A blockchain works by collecting new transactions into blocks, checking them against shared rules and linking each accepted block to the one before it. Most blockchains follow the pattern the Bitcoin whitepaper describes:

A transaction is signed and broadcast. A wallet signs it with a private key, which shows the owner approved it, and sends it to the network. See public keys vs private keys.
Nodes check it. Nodes, the computers running the network’s software, check the signature and that the coins are not already spent. Valid transactions wait in the mempool.
A block is built. A miner or validator gathers waiting transactions into a new block.
The network agrees. Consensus rules decide who may add the block. Nodes accept it only if every transaction in it is valid.
The block is linked. The new block contains the previous block’s hash, and each node adds it to its copy.
Confirmations build up. Every later block is another confirmation, which makes the transaction harder to undo.

A hash is a short digital fingerprint of data, made by a hash function such as SHA-256, which Bitcoin uses. Change one character and the fingerprint changes completely. Because each block stores the previous block’s hash, editing an old block would break every link after it, and other nodes would reject the edited copy.

Nodes also keep a public blockchain decentralized: anyone can run one, so there is no single copy to switch off or alter. See What are nodes? and How does Bitcoin work?, which follows one payment from start to finish.

What are proof of work and proof of stake?

Proof of work and proof of stake are the two most common consensus methods: the rules a blockchain uses to decide who adds the next block, and to make cheating expensive.

Proof of work: miners compete to find a block whose hash meets a difficulty target, which takes a lot of computing power and electricity. The winner adds the block and earns the block reward. On Bitcoin, a new block arrives about every 10 minutes on average (bitcoin.org, as of September 2026). See What is proof of work? and What is cryptocurrency mining?
Proof of stake: validators lock up coins as a deposit. One is picked at random to propose each block, and those who break the rules can lose part of their deposit. On Ethereum, a validator deposits 32 ETH and a new slot opens every 12 seconds (ethereum.org, as of September 2026). See What is proof of stake?

Ethereum switched to proof of stake on 15 September 2022, in an upgrade called The Merge, which ethereum.org estimates cut its energy use by about 99.95%. Bitcoin still uses proof of work. How does Ethereum work? has more detail.

Why is it called a blockchain?

It is called a blockchain because transactions are stored in blocks, and each block is chained to the one before it by that block’s hash. Together, the blocks form one continuous chain that runs back to the very first block.

That first block is called the genesis block. Bitcoin’s genesis block is time-stamped 3 January 2009, and its hash begins 000000000019d6…, a run of zeros of the kind proof of work produces. Block 1, added on 9 January 2009, stores that hash as its “previous block”: the first link in the chain.

You can look up any block or transaction with a block explorer, a website that displays blockchain data.

What is a blockchain protocol?

A blockchain protocol is the set of rules every node follows: how transactions and blocks are formatted, how nodes pass them on and how the network reaches consensus. Nodes that follow the same protocol stay in sync, and a block that breaks the rules is rejected.

Bitcoin’s protocol combines an open peer-to-peer network, digital signatures, SHA-256 hashing and proof of work. Ethereum’s protocol adds programs called smart contracts and now uses proof of stake. Changing a protocol’s rules is called a fork, and a hard fork can split a chain in two. See What is forking?

In decentralized finance, “protocol” has a second meaning: a set of smart contracts that runs a financial service on top of a blockchain. Aave is a lending protocol, and Uniswap is a protocol for swapping tokens. They are applications that run on blockchains such as Ethereum, not blockchains themselves. What is DeFi? explains more.

When was blockchain invented?

The first blockchain network went live in January 2009, when Bitcoin started. The idea of chaining records together with hashes is older: it goes back to research on time-stamping digital documents in 1991.

Date	Milestone
1991	Stuart Haber and W. Scott Stornetta publish a way to time-stamp digital documents by chaining them, so any later change would show.
1998	Wei Dai describes b-money, an early design for electronic cash that the Bitcoin whitepaper cites.
31 October 2008	Satoshi Nakamoto shares the Bitcoin whitepaper on a cryptography mailing list.
3 January 2009	Bitcoin’s genesis block, the first block of the first blockchain, is created.
30 July 2015	Ethereum launches, adding smart contracts.
15 September 2022	The Merge moves Ethereum to proof of stake.

Last checked: September 2026. Sources are listed below.

Satoshi Nakamoto is a pseudonym; see 5 people who might be Satoshi Nakamoto for the main theories. For the story of the first blockchain, read What is Bitcoin?

What is the difference between public and private blockchains?

A public blockchain lets anyone read it, send transactions and help add blocks. A private, or permissioned, blockchain lets only approved participants add blocks, and it may also limit who can read it.

Feature	Public (permissionless)	Private (permissioned)
Who can add blocks	Anyone who follows the rules	Only approved participants
Who can read it	Anyone	Anyone, or only approved users
Who runs it	Users, node operators and developers	An owner or a group of organisations
How blocks are agreed	Costly methods such as proof of work or proof of stake	Usually faster, cheaper methods, because members are known
Examples	Bitcoin, Ethereum	Networks built on Hyperledger Fabric

Last checked: September 2026. Sources are listed below.

The trade-off is trust. NIST notes that a permissioned network is easier to control, but its users must trust whoever decides who takes part, and that owner can replace blocks if it chooses. Bitcoin and ether run on public blockchains.

Can a blockchain be hacked, traced or reversed?

A large public blockchain is very hard to rewrite, its transactions can often be traced, and confirmed transactions are very hard to reverse. Very hard is not the same as impossible.

Can a blockchain be hacked?

Rewriting a blockchain would take a “51% attack”: controlling more than half of the mining power or staked coins. NIST calls this not technically difficult, just expensive, and the cost rises the further back an attacker wants to change. Smaller networks are cheaper to attack.

Most thefts happen around the chain, not to it. According to NIST, when crypto is reported stolen, it almost certainly means someone’s private keys were used, not that the blockchain was broken. Smart-contract bugs are another risk: in 2016, a flaw in an Ethereum contract called The DAO let an attacker take funds, and a hard fork returned them.

Can a blockchain be traced?

Often, yes. Public blockchains are pseudonymous, not anonymous: anyone can see every transaction and address, but not the names behind them. Once an address is linked to a person, their payments can often be followed. Read Can bitcoins be traced?

An address is a string of letters and numbers. Newer Bitcoin addresses start with “bc1”, as in this shortened example from the Bitcoin address standard: bc1qw508d6…f3t4. Never copy an address from an article; use the one your own wallet shows.

Can a blockchain transaction be reversed?

Not by the network. Bitcoin.org says Bitcoin transactions are irreversible: once confirmed, only the person who received the funds can send them back. So check the whole address, not just the first and last characters, before you send. Can blockchain transactions be reversed? explains more.

What is blockchain used for beyond crypto?

Blockchains are also used to issue tokens for other assets and run financial apps. Some projects have grown; others have shut down.

Stablecoins: tokens designed to track a currency such as the US dollar, used for payments and trading. See What is a stablecoin?
Tokenized funds: in March 2024, BlackRock launched BUIDL, its first tokenized fund issued on a public blockchain (Ethereum), open only to qualified investors.
DeFi and NFTs: lending, token swaps and digital collectibles that run as smart contracts. See What are NFTs?
Trade and shipping: TradeLens, a blockchain platform for shipping documents from Maersk and IBM, was announced in 2018. In November 2022 the companies said it would go offline by the end of March 2023, because the industry-wide collaboration it needed had not happened and it had not become commercially viable.

NIST suggests a blockchain fits when many spread-out participants want to work without a trusted third party, and advises organisations to check first whether existing technology would do the job better. For the business side, see How do blockchain companies make money? and Can I buy blockchain stock?

What does blockchain mean for you when you buy crypto?

When you buy crypto and have it sent to your own wallet, it arrives as an ordinary blockchain transaction. It needs confirmations before it is final and cannot be undone once confirmed, so check the wallet address and the network before you confirm an order. What is a crypto wallet? explains how wallets hold your keys.

Frequently asked questions

No. Bitcoin is a cryptocurrency, and its blockchain is the shared record that tracks it. Bitcoin was the first network to use a blockchain, but many others, such as Ethereum, run their own.

The first working blockchain was Bitcoin, described in 2008 by someone using the name Satoshi Nakamoto and launched in January 2009. It built on earlier work, such as a 1991 method for chaining time-stamped documents.

A block is a batch of transactions plus a header. The header includes the hash of the previous block, which links the blocks into a chain. On Bitcoin, a new block is added about every 10 minutes on average.

It has been tried, but experts are cautious. In 2018, the US National Academies of Sciences, Engineering, and Medicine concluded that blockchain does little to solve the basic security problems of elections and adds new weaknesses. For example, malware on a voter’s device could change a vote before it reaches the blockchain.

No, but the basics help you avoid costly mistakes. Confirmed transactions cannot be undone, so always check the wallet address and the network before you send or buy. For a walkthrough, read how to buy Bitcoin.

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