What is blockchain?

A distributed ledger, formed across a peer-to-peer network of independently controlled nodes. Every participant on this network has a copy of and instant access to all data and – at least in public blockchains – is equal to all other participants. There is no central authority that approves or declines transactions, but consensus about the “one truth” is achieved algorithmically. Once a transaction has been stored on the blockchain and consensus is achieved, it is secured cryptographically, which makes it inherently impossible to tamper with (or at least very, very, very hard).

From a technical point of view, a blockchain is basically a linked list of blocks, with each block containing a number of transactions. Each block contains a hash of the previous block – a cryptographic fingerprint that uniquely identifies a block and all its content. If only one bit of the block changes – for example by tampering with a transaction – the hash value changes as well, which effectively breaks the chain and invalidates all subsequent blocks and transactions. This makes blockchain almost impossible to tamper with. In case of Bitcoin, for example, establishing an alternative transaction history requires control of at least 50% of the computational resources of the network. With a power consumption rivaling countries like Ireland, this can be considered practically impossible.