How blockchain works: blocks, hashes and chains

A shared record nobody owns alone

Imagine a class register that every student keeps a copy of. When something new is recorded, everyone checks it and adds it to their copy. If one person secretly changes an old entry, their copy no longer matches everyone else's, and the change is rejected. That is the core idea of a blockchain: a distributed ledger held by many independent computers (called nodes) that agree on the same history without one central owner.

Blockchains became famous through Bitcoin, but the technology is a general way to keep tamper-evident records. This note is about how it works, not about buying or selling anything.

Hashes: the digital fingerprint

A hash function turns any input into a fixed-length output. Good cryptographic hashes such as SHA-256 have three useful properties: the same input always gives the same output, a tiny change in input gives a completely different output, and you cannot work backwards from the output to the input. Try it in a terminal or with the hash tool:

echo -n "pay Ali 10" | sha256sum
echo -n "pay Ali 11" | sha256sum

The two outputs look completely unrelated, even though only one character changed. That sensitivity is what makes tampering visible.

Blocks and the chain

A block holds a batch of transactions plus a header. The header usually includes:

Because each header contains the previous block's hash, changing a transaction in block 2 changes block 2's hash. Block 3 still points at the old hash, so the link breaks, and so on up to the newest block. To hide a change you would have to rebuild every later block and convince most of the network to accept your version. Consensus rules make that very costly. The Merkle tree lets a node prove that one transaction is in a block without downloading every transaction.

Signatures, peers and consensus

• Digital signatures: each user has a private key and a public key. Signing a transaction with the private key proves the owner approved it; anyone can check with the public key. See cryptography basics.
• Peer-to-peer network: nodes share new transactions and blocks directly with each other.
• Consensus: a set of rules for agreeing which block is added next. The two best-known methods are compared in proof of work versus proof of stake.

Tip: "immutable" really means tamper-evident and very hard to change. It does not mean the data is true. If someone records wrong information honestly, the blockchain will keep that wrong information safely forever.

Common misunderstandings include thinking a blockchain is encrypted (most public chains are readable by anyone; signatures and hashes are not the same as encryption), and thinking it is always the best tool. A normal database is usually faster and simpler when one trusted organisation controls the data. Blockchains are most useful when several parties who do not fully trust each other need one shared history.