## glossary
What is Blockchain?
Blockchain is a distributed data structure that records transactions in cryptographically chained blocks, replicated across many participants. Its central property is allowing parties that do not trust each other to agree on the state of a ledger, without depending on a central authority.
The idea was introduced in 2008 in the Bitcoin paper, signed under the pseudonym Satoshi Nakamoto, solving a problem that had been open until then: how to prevent the same digital coin from being spent twice without an intermediary doing the checking.
How the chaining guarantees immutability
Each block carries the cryptographic hash of the previous block. Since the hash depends on the entire content, altering an old transaction changes its hash, which invalidates the next block, and the next, cascading to the end of the chain.
Block 100 Block 101 Block 102
+--------------+ +--------------+ +--------------+
| previous: | | previous: | | previous: |
| 0000a3f... |<--| 0000b71... |<--| 0000c92... |
| transactions | | transactions | | transactions |
| hash:0000b71 | | hash:0000c92 | | hash:0000d14 |
+--------------+ +--------------+ +--------------+
Altering block 100 changes its hash, block 101 now
points to a hash that no longer exists, and the whole
chain breaks. Redoing it all would require more computing
power than the rest of the network combined.Consensus: how the network agrees
Without a central authority, a mechanism is needed to decide which version of history is valid. Proof of Work demands computational expenditure to propose blocks, making attacks economically unfeasible at the cost of high energy consumption. Proof of Stake replaces that expenditure with a financial guarantee: validators deposit assets and lose them if they act in bad faith. Ethereum migrated from one to the other in 2022, drastically reducing its energy consumption.
Types of blockchain
- Public — anyone can participate and validate. Bitcoin, Ethereum. Maximum decentralization, lower performance.
- Private — controlled by one organization. Fast and cheap, but it is debatable whether a blockchain is even needed in that scenario.
- Consortium — managed by a group of organizations. Common in supply chains and between financial institutions.
Where it makes sense — and where it does not
The useful question to ask before adopting it: is there more than one party that does not trust the others, with no intermediary accepted by all, needing a shared, auditable ledger? If the answer is no, a traditional database is simpler, faster and cheaper. Applications that genuinely benefit include supply chain traceability, public records and settlement between institutions. The details are in what blockchain is, types of blockchain and use cases and applications.
## faq
Frequently asked questions
Is blockchain the same thing as Bitcoin?
No. Bitcoin is the first application of the technology — a digital currency. Blockchain is the data structure and consensus protocol that make it possible, and that today underpin thousands of different applications, many unrelated to currencies.
Is data on a blockchain really immutable?
In practice yes, for large public networks, because rewriting history would require controlling the majority of the validation power. In small or private networks, the guarantee is much weaker — immutability comes from distribution, not from the math alone.
What are smart contracts?
They are programs stored on the blockchain that execute automatically when predefined conditions are met, without an intermediary. Popularized by Ethereum, they enable decentralized financial applications — with the caveat that bugs in deployed contracts are hard or impossible to fix.
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