A blockchain is a shared digital ledger that no single party controls. Here is how it works, and why it matters.
A blockchain is a digital ledger stored on many computers at the same time. Everyone has the same copy, and new entries are added according to shared rules.
Because no single party owns the ledger, no bank or other intermediary is needed to keep it in order. Participants can trust the contents without having to trust each other.
Transactions are grouped into blocks. Each block gets a cryptographic fingerprint that also contains the fingerprint of the block before it.
The blocks are thus linked in a chain. If someone changes an old entry, the fingerprints no longer match, and the change is exposed immediately.
Blockchain became known through Bitcoin, launched in 2009. There, the purpose is to keep track of who owns which bitcoin, without a central bank or a bank.
Since then the technology has been used for much more. Today blockchains underpin stablecoins, tokenized securities and new payment solutions, and banks and exchanges are building their own solutions on the technology.
A blockchain replaces trust in an institution with cryptography and shared rules. That makes it possible to move value directly between parties, around the clock and across borders.
This is what makes blockchain the foundation of onchain finance: money, assets and agreements that are recorded and settled directly on a blockchain.