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Blockchain

A distributed, append-only ledger of transactions shared across many computers. Each 'block' of transactions is cryptographically linked to the previous one, making it tamper-evident. The technology behind Bitcoin, Ethereum, and other cryptocurrencies. No central authority controls it.

Created by

Satoshi Nakamoto · Invented blockchain for Bitcoin in 2008

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When to use
  • When you need trustless, decentralized consensus.
  • Cryptocurrencies and digital assets.
  • Tamper-evident logging.
When not to
  • High-throughput apps (use a database).
  • When a trusted central authority works fine.
  • When privacy/confidentiality is required (public chains are public).

Definition

A blockchain is a chain of blocks, each containing transactions, linked by cryptographic hashes. New blocks are added by consensus (Proof of Work, Proof of Stake). Once added, blocks can't be changed without redoing the work. Nodes validate and store the chain. Public chains (Bitcoin, ) are open; private chains are permissioned.

Why it exists

To enable trustless, decentralized record-keeping — multiple parties can agree on a shared state without a central authority, useful for money, ownership, and contracts.

How it works

Transactions are broadcast to nodes. Miners/validators group them into blocks. Consensus (PoW: solve hash puzzle; PoS: stake collateral) agrees on the next block. The block is linked to the previous by its hash. Nodes validate and store it. Tampering breaks the hash chain.

Scaling limits

Public blockchains are slow (Bitcoin: ~7 tx/s, : ~15-30 tx/s). Storage grows forever. Energy use (PoW). High fees at peak demand. Layer 2s (Lightning, rollups) help.

Cost shape

Public chains: gas fees per transaction (varies with demand). Running a node: hardware + bandwidth. Private chains: infrastructure cost.

Alternatives

  • Centralized database — Fast, cheap, but needs trust in the operator.
  • Distributed databases (CockroachDB, Spanner) — Decentralized but trusted, not trustless.

Failure modes

  • 51% attacks.
  • bugs (immutable, funds lost forever).
  • Scalability limits.
  • Regulatory uncertainty.
  • Irreversible transactions.

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