Note · Bitcoin and crypto
What is a blockchain? A shared ledger, explained simply
A blockchain is a shared record kept by many computers at once, written in blocks that each lock in the one before, so past entries are very hard to change.
This note and the comments marked the Graphite mark are Graphite’s: an AI model, Claude Opus 5.5, wrote them on 4 November 2026, following Graphite’s own instructions, from the sources at the note’s end, and checked them against those sources. Check them as you would anyone’s.
This note and its comments are written by an AI model.
Contents · 6 sections
A blockchain is a shared record that many computers keep identical copies of, with new entries added in batches called blocks. Each block carries a digital fingerprint of the block before it, so the blocks form a chain, and changing any old entry would break every link after it. That makes a blockchain a record that strangers can trust without trusting any one keeper. It was first used at scale for Bitcoin in 2009.
In short
- A blockchain is a ledger copied across many computers, which agree on each new page through a set of rules called consensus.
- Every block holds a fingerprint, a hash, of the one before, so editing history is easy to detect and very costly to force.
- It is good at one thing, a record no single party controls, and poor at most things a normal database does well.
How does a blockchain work, in plain words?
Picture a notebook of payments that thousands of people each keep a copy of. Whenever enough new payments come in, someone writes a new page. Before anyone adds it to their copy, they check it: are the payments signed by the people paying, and does each payer actually have the money? If the page passes, everyone adds it to the end of their notebook. Nobody can tear out an old page, because, as the next section shows, each page is sealed to the one before it.
In a real blockchain, the pages are blocks, the people are computers called nodes, and the signatures use public key cryptography: each user has a private key to sign with and a public key that anyone can use to check the signature. The notebook is the same everywhere, because every node follows the same rules and rejects anything that breaks them. The U.S. National Institute of Standards and Technology describes blockchains in its 2018 overview as tamper-evident and tamper-resistant ledgers, usually kept without a central authority.
What links the blocks together?
The link is a hash. A hash function takes any data and turns it into a short string of fixed length, its fingerprint. The one Bitcoin uses, SHA-256, is a published federal standard. The same input always gives the same fingerprint, and the smallest change gives a completely different one. No one has found a practical way to work backward from a fingerprint to the data, or to find two inputs that share one.
A worked example: three blocks, one edit
Here is a toy chain, with real SHA-256 fingerprints shortened to their first eight characters. Each fingerprint is taken of the block's full text, such as "Block 1. Previous: none. Ana pays Ben 5.", and each block writes in the fingerprint of the block before it.
| Block | What it says | Its fingerprint |
|---|---|---|
| 1 | Previous: none. Ana pays Ben 5. | a06fed7b… |
| 2 | Previous: a06fed7b. Ben pays Cal 2. | 24c074c7… |
| 3 | Previous: 24c074c7. Cal pays Dee 1. | fc35fa6a… |
Now suppose Ben wants to claim he was paid 50, not 5, and edits block 1 to say "Ana pays Ben 50." Its fingerprint becomes 9d9a4768…, not a06fed7b. But block 2 still says "Previous: a06fed7b". The edit doesn't hide; it breaks the chain at the exact spot where it was made. To make the chain look whole again, Ben would have to rewrite block 2 with the new fingerprint, which changes block 2's fingerprint, which means rewriting block 3, and so on to the newest block. And he would have to do it on most of the copies held by thousands of nodes, which check every block for themselves.
This idea is older than Bitcoin. In 1991, the researchers Stuart Haber and W. Scott Stornetta described chaining time-stamped documents by their hashes so that none could be backdated. Bitcoin's 2008 paper cites their work.
Who decides which block comes next?
Hashes make tampering visible, but something must stop anyone simply rewriting the whole chain quickly. That job falls to consensus, the rules by which nodes agree on the next block.
Bitcoin uses proof of work. To add a block, a computer must find a number that makes the block's fingerprint start with a long run of zeros, which takes vast numbers of guesses and a great deal of electricity; the process is explained in how Bitcoin mining works. Rewriting history means redoing all that work faster than the rest of the network combined. Most newer chains, including Ethereum since 2022, use proof of stake instead: participants lock up coins as a deposit, take turns proposing blocks, and lose part of the deposit if they cheat. The two are compared in proof of work vs proof of stake.
Is a blockchain the same as Bitcoin?
No. Bitcoin is one blockchain and the currency recorded on it. Ethereum is another, built to run programs, called smart contracts, as well as payments. There are also private or "permissioned" blockchains, where only approved companies run nodes. Those give up the main feature of public chains, that no one needs permission to join, in exchange for speed and control.
What are blockchains good and bad at?
A blockchain solves one problem well: keeping a shared record when the parties don't trust each other and don't want anyone in charge. For almost everything else, an ordinary database is faster, cheaper and easier to fix. NIST's overview makes the same point and suggests asking first whether a project needs a shared, tamper-evident record with no trusted keeper at all.
| Good fit | Poor fit |
|---|---|
| Money and assets moved between strangers with no bank | Records one organization already keeps and is trusted to keep |
| A public record that must stay checkable for decades | Data that must be corrected or deleted, such as personal details |
| Rules that must run the same way for everyone | Anything needing thousands of updates a second at low cost |
The record also only guarantees what is written into it. A blockchain can prove a shipment was logged, not that the crate held what the log says.
Large projects have learned this the hard way. In November 2022, the Australian Securities Exchange scrapped a blockchain-based replacement for the system that settles its share trades after years of delays, writing off A$245–255 million before tax.
Check yourself
- Without looking back: why does changing one old block break every block after it?
- What does consensus add that hashes alone don't?
- Name one job a blockchain suits and one an ordinary database does better, and say why.
Sources
- Blockchain Technology Overview (NISTIR 8202) — National Institute of Standards and Technology, 2018
- How to Time-Stamp a Digital Document — Stuart Haber and W. Scott Stornetta, Journal of Cryptology, 1991
- Bitcoin: A Peer-to-Peer Electronic Cash System — Satoshi Nakamoto, 2008
- Secure Hash Standard (FIPS 180-4) — National Institute of Standards and Technology
- ASX axes blockchain-based core replacement — iTnews, 17 November 2022