What Is Blockchain and How Does It Work
A blockchain is a public ledger kept by thousands of computers at the same time, to which records are only ever added, never deleted. Transactions are grouped into blocks, and each block contains a fingerprint (hash) of the previous block. The blocks thus form a chain in which an older record cannot be quietly rewritten, because every block after it would change.
How a blockchain works: the Bitcoin example
When you send someone bitcoin, your wallet signs the transaction with your private key and broadcasts it to the network. The network's nodes check that the signature is valid and that nobody has spent the coins yet. The transaction then waits until a miner includes it in a block.
A Bitcoin block is created every 10 minutes on average. Besides transactions, it contains a header with the hash of the previous block, a timestamp and a number called the nonce, which miners keep changing until they find a hash below the target value. Whoever finds it first adds the block and receives the reward – currently 3.125 BTC plus transaction fees.
Each further block on top of your transaction is one "confirmation". Exchanges and shops usually wait for several confirmations, because every additional block makes a reversal more expensive.
Why a blockchain cannot easily be rewritten
If someone wanted to change a transaction in a block that is an hour old, on Bitcoin they would have to recompute that block plus six more – and catch up with the rest of the network, which keeps going in the meantime. That would require more computing power than the whole rest of the network combined (a so-called 51% attack). The entire Bitcoin network now computes almost 1,000 EH/s (as of 18 Oct 2026), so in practice this is unrealistic.
Security therefore does not rest on trust in a bank or a company, but on the fact that honest miners are in the majority. In Proof of Stake networks, the same role is played by validators' staked coins – see Proof of Work vs. Proof of Stake.
How blockchains differ
The principle is the same, the parameters are not. Block time determines how quickly the first confirmation arrives and how often a pool receives rewards.
| Network | Average block time | Consensus |
|---|---|---|
| Bitcoin | 10 minutes | Proof of Work (SHA-256) |
| Litecoin | 2.5 minutes | Proof of Work (Scrypt) |
| Dogecoin | 1 minute | Proof of Work (Scrypt) |
| Kaspa | 0.1 seconds (10 blocks per second) | Proof of Work (kHeavyHash), BlockDAG |
| Ethereum | 12 seconds | Proof of Stake |
Why it matters for miners
The miner is the one who extends the blockchain. Your ASIC miner does nothing other than try, hundreds of trillions of times per second, to assemble a block header with a valid hash. The block reward and block frequency directly determine how much mining earns, and changes to the network's rules – such as the halving – show up in your income immediately.
The blockchain is also the reason why pools only pay out above a certain amount: every transaction takes up space in a block and costs a fee. More in the article pool payouts and minimum balance.
Related terms
- Cryptocurrency – what is actually recorded on the blockchain.
- Cryptocurrency mining – how a new block is created, in detail.
- Proof of Work and Proof of Stake – two ways a network agrees on the next block.
What next
If you are interested in helping extend a blockchain with your own machine, start with the article Which cryptocurrencies can be mined.
Sources
Frequently asked questions
Who owns a blockchain?
How many confirmations are needed for a transaction to be secure?
Is blockchain the same as Bitcoin?
Can anything be deleted from a blockchain?
This text was prepared with the help of AI. Facts, figures and procedures were checked by Yegor.
