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Blockchain

A blockchain is a shared digital ledger that stores information, such as crypto transactions. The information is organized into blocks that are linked in order.

Last updated • 2 min read
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What is a blockchain?

A blockchain is maintained by a network of computers, also called nodes. These computers store and verify information, so no single bank, company, or person has full control.

When someone makes a transaction, the network checks it first. Approved transactions are then grouped together in a new block. This block is added to the blockchain and linked to the previous blocks. This creates a chain of blocks that records all transactions.

Once added, blocks are almost impossible to change. Because the blocks are linked, changes are visible and tampering is very difficult. This also means that transactions usually can’t simply be reversed if there’s a mistake or fraud.

An example of a blockchain

Suppose you send Bitcoin from your crypto wallet to someone else. Computers on the Bitcoin network check whether the transaction is valid, for example, whether you have enough Bitcoin to send the amount.

Once verified, the transaction is added to a new block along with other transactions. This block is added to the existing blockchain. This records the payment in a public digital ledger, and anyone can verify that the transaction took place.

Why is a blockchain important in crypto?

A blockchain is the foundation of many cryptocurrencies. Bitcoin and Ether, for example, are digital currencies that use a blockchain to process and record transactions. This lets people send crypto to each other without a bank having to process the payments.

Crypto news regularly covers blockchain developments. These might include new updates, faster transactions, lower transaction fees, or network problems. These developments can influence how a cryptocurrency is used, how popular it is, and its price.

A blockchain is an important technology behind crypto, but it doesn’t guarantee that a cryptocurrency is safe or will increase in value. The value of a cryptocurrency still depends on various factors, including supply and demand.

Disclaimer: This content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The information provided may be incomplete, inaccurate, or outdated and should not be relied upon as such. Nothing on this website should be considered a recommendation to buy, sell, or hold any cryptocurrency. Investing in crypto-assets involves risk of loss.