Blockchain
Decentralised, tamper-resistant database where transactions are stored in linked blocks – basis for cryptocurrency, supply chain and smart contracts.
Blockchain is one of the most discussed technologies of recent years – and one of the most misunderstood. Beyond the crypto hype it offers real value in supply chain, digital identity and financial services. Not every problem needs a blockchain: knowing when it makes sense and when it does not is crucial.
What is Blockchain?
A blockchain is a distributed, immutable database (distributed ledger) where records (transactions) are stored in chronologically linked blocks. Each block contains a cryptographic hash of the previous block, a timestamp and the transaction data. That makes later tampering practically impossible: changing one block invalidates the rest of the chain. The chain is stored decentralised by many participants (nodes) and validated by consensus (Proof of Work, Proof of Stake) – there is no central authority.
How does Blockchain work?
When a new transaction is submitted it is broadcast to the network. Nodes validate it (e.g. does the sender have enough balance?). Valid transactions are pooled. A chosen node (miner in PoW, validator in PoS) bundles them into a new block, solves a cryptographic puzzle (PoW) or is chosen by stake (PoS), and appends the block to the chain. Other nodes verify and add it to their copy. Smart contracts add executable code that enforces agreements without a middleman.
Practical Examples
Supply chain: Walmart uses IBM Food Trust (blockchain) to trace food origin in seconds instead of days; contamination can be isolated quickly.
Digital identity: Self-sovereign identity (SSI) lets users control and share identity data selectively without a central provider.
DeFi: Lending, borrowing and trading without banks – smart contracts on Ethereum automate financial products transparently.
NFTs and digital ownership: Blockchain proves ownership of digital and physical assets – from art to property deeds.
Energy trading: Peer-to-peer electricity trading where solar owners sell surplus to neighbours – automated via smart contracts.
Typical Use Cases
Supply chain: Transparent, tamper-proof documentation of chains and provenance
Financial services: Cross-border payments, trade finance and tokenised securities
Healthcare: Secure, interoperable patient records with patient-controlled access
Government: Land registers, voting and official attestation in a tamper-proof way
IP: Copyright and licensing enforced automatically via smart contracts
Advantages and Disadvantages
Advantages
- Tamper resistance: Once written, data cannot be changed later
- Decentralisation: No single point of failure or dependence on one authority
- Transparency: Participants can view and verify the history
- Automation: Smart contracts enforce rules without a middleman
- Trust: Technical trust replaces institutional trust
Disadvantages
- Scalability: Public blockchains are slower than central databases (e.g. Ethereum ~30 TPS vs Visa ~65,000 TPS)
- Energy: Proof-of-Work chains use a lot of energy (Bitcoin); Proof-of-Stake is more efficient
- Complexity: Blockchain development needs specialised skills (Solidity, crypto, consensus)
- Irreversibility: Smart contract bugs or lost private keys cannot be undone
- Regulation: Legal framework for many uses is still evolving
Frequently Asked Questions about Blockchain
When does blockchain make sense and when not?
What is a smart contract?
Is blockchain GDPR compliant?
Related Terms
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