What is blockchain?
SUMMARY
A blockchain is a ledger kept on many computers at once instead of in one place, and it is very hard to change after the fact.
A shared ledger
Picture a ledger. Normally a bank, an institution or a company keeps it, so trusting the records really means trusting that organisation. In a blockchain, copies of the same ledger live on many computers across a network. No one can alter a record alone, because the other copies immediately show the difference.
Why a “chain”?
Records are grouped into blocks. Each block contains a mathematical summary (a hash) of the block before it. Change an old block and its summary changes too, which invalidates every block that follows. That link is where the name comes from; quietly rewriting history becomes close to impossible.
How does the network agree?
The network decides whether a new block gets added using agreed rules, called a consensus mechanism. Bitcoin does this through mining with computing power (proof of work); Ethereum does it through value that participants lock up in the network (proof of stake).
Smart contracts
On some networks the ledger does more than store records: it also runs programs. These programs, called smart contracts, execute on their own once their conditions are met. One example is a payment being released automatically once “delivered” is written to the chain.
Is it needed everywhere?
No. Blockchain makes sense where you do not want trust concentrated in one organisation and where records must not change afterwards. When speed and privacy come first, an ordinary database is often the better choice.