A blockchain is a shared record book that many computers keep in sync, with no single owner. This article explains how it is built, why its history is very hard to change, and what a smart contract is, using simple words and real examples.
You can watch the idea in action while you read. Open the live Ethereum page or the live Bitcoin page and you will see new blocks appear one after another.
The basic idea: a record book many people keep
Imagine a notebook that lists every payment ever made on a network. Now imagine that thousands of people each hold an identical copy, and that new pages are only added when most of them agree. That is the core of a blockchain.
The record is public. Anyone can read it and check it. Nobody needs to trust a bank or a company to keep the books, because the rules of the network and the copies held by many participants do that job.
Blocks: pages of transactions
A transaction is one instruction, for example "send 20 USDC from Alice to Bob". Transactions are collected into groups called blocks. A block is like one page in the record book.
Each block has a block height, which is its position in the chain. The first block has height 0, the next one has height 1, and so on. Blocks are made at a regular rhythm that depends on the network:
- Bitcoin makes a block about every 10 minutes.
- Ethereum makes a block every 12 seconds.
- Solana produces a new slot about every 400 milliseconds.
On ChainMonitor each block is shown as a tile that tells you how full it is and what fees it paid. Click a tile to see the transactions inside. The read a transaction guide explains what you will find there.
Chained hashes: why the chain is a chain
A hash is a short fingerprint of some data. A hash function turns any input into a fixed-length string of characters. The same input always gives the same hash. Change one letter of the input and the hash looks completely different. You cannot work backward from a hash to the data.
Every block contains the hash of the block before it. That link is what makes it a chain.
- Block 100 contains its transactions and the hash of block 99.
- Block 101 contains its own transactions and the hash of block 100.
- Block 102 contains the hash of block 101, and so on.
If someone changed one transaction in block 100, the hash of block 100 would change. Block 101 would then point to a hash that no longer matches. The mismatch would show up at once, and every block after it would also be broken.
Nodes: the people who keep the copies
A node is a computer that runs the network software, stores the blockchain and checks the rules. When a new block arrives, each node verifies it independently. If a block breaks a rule, for example by spending coins that do not exist, honest nodes reject it.
Some nodes also help produce blocks. Others only read and verify. When you use a wallet, it usually talks to a node through an RPC endpoint, a web address that answers questions such as "what is my balance?". You can compare public endpoints on the RPC health page.
Consensus: how everyone agrees
With thousands of copies, the network needs a way to agree on which block comes next. That agreement process is called consensus. There are two main kinds.
Proof of work
In proof of work (PoW), participants called miners compete to solve a hard puzzle. The puzzle can only be solved by trying a huge number of guesses, which costs electricity and computer time. The winner adds the next block and receives a reward. Bitcoin uses proof of work.
Cheating is expensive. To rewrite history, an attacker would have to redo the work for the old block and all blocks after it, and do it faster than the rest of the network combined.
Proof of stake
In proof of stake (PoS), participants called validators lock up coins as a deposit, called a stake. The network picks validators to propose and approve blocks. Validators who follow the rules earn rewards. Validators who break them can lose part of their stake. Ethereum and Solana use proof of stake.
Cheating is expensive here too, but the cost is the deposit instead of electricity.
Why nobody can quietly edit history
Three things work together:
- Hash links. Changing an old block breaks every later block.
- Many copies. An editor would need to change the majority of the copies, not just one.
- Cost. Under proof of work an attacker needs enormous computing power. Under proof of stake an attacker needs a huge stake that could be destroyed.
This does not mean the system is magic. It means history becomes harder to change the more blocks are added on top of it. That is why exchanges and apps wait for several confirmations before they treat a payment as final. See finality and confirmations for details.
Two ways to keep balances: accounts and UTXOs
Networks track "who owns what" in one of two ways.
Account model. Ethereum, Arbitrum, Base, Optimism, Polygon and Solana work like a bank ledger. Each address has a balance, and a transaction subtracts from one balance and adds to another.
UTXO model. Bitcoin works more like cash. A UTXO (unspent transaction output) is a coin-like piece that can be spent only once. A payment uses one or more UTXOs as inputs and creates new ones as outputs, usually including "change" that returns to the sender. Your Bitcoin balance is the sum of the UTXOs you can spend.
Neither model is better in every way. They are different designs with different trade-offs.
What is a smart contract?
A smart contract is a small program stored on a blockchain. It runs exactly as written when someone sends it a transaction. It can hold tokens, follow rules and send results to other contracts. Nobody can change a deployed contract's code unless the code itself allows upgrades.
Examples: a contract that swaps one token for another, a contract that lends money against collateral, or the contract that defines the USDC token. Ethereum and the chains built on it run contracts using the EVM (Ethereum Virtual Machine). Solana has its own contract system, where programs run on a different design. Bitcoin supports only simple scripts.
Running a contract costs a fee called gas. See gas and fees for how it is calculated.
A smart contract is only as good as its code. A bug in a contract can lose funds, and a transaction cannot be undone once it is final.
Where to go next
To see how different networks relate to each other, read layer 1, layer 2 and layer 3 explained. To learn how to hold your own funds, read wallets and keys. For short definitions, use the glossary.
Frequently asked questions
Is a blockchain the same as Bitcoin?
No. Bitcoin is one blockchain and the first one that became widely used. A blockchain is the underlying technology. Ethereum, Solana and many others are separate blockchains with their own rules.
Can a blockchain be hacked or changed?
Rewriting old blocks of a large network is extremely costly and has not happened on the biggest ones. Most losses come from other places: stolen keys, scams, or bugs in smart contracts and apps built on top.
Who controls a blockchain?
No single owner controls a public blockchain. Rules are set by the software that nodes run, and changes need broad agreement among developers, validators or miners, and users. This is slower than a company decision on purpose.
What is the difference between a block and a transaction?
A transaction is one action, like a payment. A block is a bundle of many transactions added to the chain together.
Why do blockchain transactions cost a fee?
Fees pay the people who run the network and stop spam. Blocks have limited space, so fees also decide whose transactions get in first when the network is busy.