A blockchain is a digital ledger on which transaction data is stored chronologically.

A blockchain is a public and immutable ledger in which the transactions of cryptocurrencies are confirmed and recorded. Speed and security are key elements needed to instantly share information with each other in a secure manner. Unlike a bank's ledger, the blockchain is accessible to all network users.

Blocks of transactions

The transactions can be read back in detail. All the details regarding the transactions, can be followed from the beginning to the end. A blockchain consists of blocks. When a block is confirmed on the blockchain, it cannot be changed and retrieved by the sender. Before a block is added and confirmed on the blockchain, the transaction will be evicted to the network.

Distributed ledger

The blockchain is the most important part of a cryptocurrency. It is what distinguishes cryptocurrencies from digital money. The blockchain underlies the "open" nature of cryptocurrencies. Bitcoin uses a Proof-of-Work blockchain. This blockchain uses the processing power of computers to accept transactions. An important aspect of a Proof-of-Work blockchain is that individual computers always have the latest copy of the blockchain. The more transactions are made, the longer the blockchain becomes. This also requires larger and larger computers that consume a lot of power.

Critique of consensus mechanism

From its inception, Bitcoin has faced criticism. Some of this criticism focused on the Proof-of-Work system. This would use too much energy and be unsustainable; With growing transactions, computers would not be able to update the blockchain in the future. Another consensus mechanism is Proof-of-Stake. This mechanism generally uses less energy and is seen by some as an evolved version of the Proof-of-Work blockchain. Cryptocurrencies that use Proof-of-Stake include: ADA (Cardano), SOL (Solana) and as of Sept. 15, 2022, Ethereum also uses Proof-of-Stake.