An introduction to blockchain

A plain explanation of hashing, distributed ledgers and consensus, without the vocabulary tax.

Hashing: the fingerprint

A hash function turns any input into a fixed-length string. Change one character of the input and the output changes completely. That property is what lets you prove something has not been altered without storing the something itself.

The chain: linking fingerprints

Each block contains a hash of the previous block. Alter any earlier record and every subsequent hash stops matching, so tampering is detectable by anyone holding the latest block.

Distributed: nobody holds the only copy

Many participants keep the ledger and reach agreement on what it contains. No single administrator can rewrite history, which is the property that makes the rest useful.

Consensus: how agreement happens

Proof of work spends electricity to make rewriting expensive. Proof of stake makes rewriting expensive by putting capital at risk. Delegated models trade some decentralisation for throughput. The trade-offs are real and the choice matters more than the marketing suggests.

What it costs

Every write is replicated to every participant, so throughput is low and cost per write is high compared with a normal database. That is the trade you are making: you pay in performance for verifiability.