The Bitcoin blockchain is a special type of database that records every transaction ever made with Bitcoin. It is called a “block chain” because it is literally a chain of blocks, and each block contains a batch of transactions.
Here is how it works:
- Transactions are created
People send Bitcoin to each other. These transactions are broadcast to the network. - Miners gather transactions into blocks
Miners collect many transactions into a candidate block. They then compete to solve a proof of work puzzle. - A new block is added
The first miner to solve the puzzle broadcasts its block. Other nodes verify the transactions and the proof of work. If everything is valid, they attach the new block to the end of the chain. - Each block links to the previous one
Every block includes a reference (a hash) to the block before it. This creates a chain that goes all the way back to the first block, called the genesis block.
Why it matters:
- Immutability: Once a block is deeply buried under many more blocks, changing it would require enormous computing power. This makes history very hard to rewrite.
- Transparency: Anyone can download the blockchain and verify that the rules are being followed.
- Coordination: All honest nodes converge on the same chain, with the most proof of work, as the valid history.
You can think of the blockchain as a shared, append only log that the whole world can inspect and verify. Bitcoin is the system of incentives and rules built around that log.