A blockchain is a digital record of information. This information could be anything from monetary transactions to passport details.
Traditionally, valuable information like this would be stored in one place, by a bank or government. For example, a bank keeps a list of every transaction that’s made with its customers’ money, so it can accurately keep track of how much money each customer has.
Instead of keeping this information in one place (like a bank), blockchain technology stores this information on thousands of computers. Each computer has a copy of the blockchain – a list of every transaction ever made in exact time and date order. Once a transaction is added to the blockchain it can’t be edited or deleted.
Instead of having to pay a third party like a bank or land registry to transfer assets from one person to another, the blockchain allows this to happen securely by sending a record of the transaction to every computer in the network.
If anyone tried to change a copy of the blockchain without permission, all the other computers in the network would know and the change could not be made.
Here’s an example:
Person A wants to send person B some money. The blockchain contains a record of how much money both Person A and Person B have. All the computers in the network check whether Person A has enough money to pay Person B. They do this by examining their copy of the blockchain (a record of all previous transactions). If they come to an agreement and confirm that Person A has sufficient funds, the transaction is recorded and given a timestamp.
If someone tried to pay for something without the required funds, the network would reject the transaction.