Blockchain & Distributed Ledgers — Level 3
An introduction to blockchain and distributed ledger technologies.
What is a blockchain?
A blockchain is a tamper-evident ledger made of blocks that record transactions. Each block contains a summary (hash) of the previous block which makes the chain difficult to alter without detection.
Key ideas in simple terms:
- Decentralisation: data is shared across multiple nodes rather than held by a single trusted party.
- Immutability: once recorded and agreed-upon, entries are difficult to change.
- Consensus: nodes run a protocol to agree on the next block (several algorithms exist).
Uses and examples
- Cryptocurrencies (e.g., Bitcoin) — digital money recorded on a public ledger.
- Supply chain tracking — proving provenance of goods.
- Smart contracts — code that runs on a ledger and enforces simple rules automatically.
Strengths and limitations
Strengths:
- Transparency and tamper-resistance for public ledgers.
Limitations:
- Scalability and energy use can be concerns (depends on consensus algorithm).
- Privacy: public ledgers reveal transactions unless special measures are used.
- Not always the right tool — centralised databases may be simpler and faster.
Short practical exercise
- Use a blockchain explorer for a public chain to view a transaction (or use a simulated ledger). Identify sender, receiver, amount (if applicable), and what metadata is visible.
- Write a short paragraph: where might a ledger help in your everyday life, and where might it cause problems?