A blockchain is a system of storing data that makes the data practically impossible to edit or hack. It’s a network of dozens to thousands of computers that track transactions in their network. They generate a giant shared ledger of who owns what, and how much of it. The transactions in a blockchain are chained together into blocks. Once written, those blocks can’t be changed, making blockchain the most indelible way to store data. A blockchain storage system is a type of distributed ledger, but not all distributed ledgers are blockchains.
Blockchains differ from typical databases because they link data blocks together via cryptography in two important ways. First, new data entered in a blockchain goes into a fresh block. When the block is full of data, it becomes linked to the previous block. This means that the data is chained together in chronological order. Decentralized blockchains are considered “immutable” because the data entered is secure, unchangeable and permanent. Second, no single server is the “owner” of the data. Each server contains a complete and authoritative set of data. This is different than traditional databases, in which the primary server is the owner even though remote servers may have permissions to read from and/or write to the primary server.
You can store many different kinds of information on a blockchain, but it’s most commonly used as a ledger for transactions. For example, blockchain and cryptocurrencies like Bitcoin and Ethereum work hand-in-hand. Bitcoin utilizes a decentralized blockchain so that no single person or group has control over the tokens or transactions.