Note (September 2026): Earlier versions described blockchain as an encrypted database and said crypto and NFTs were the only significant blockchain assets. Public blockchains are transparent rather than encrypted, and stablecoins and tokenized funds are now major uses, so those passages and the regulation details have been corrected.
Blockchain technology is a shared digital ledger that records transactions in blocks, each linked to the previous block by a cryptographic hash and copied across many computers. Because changing an old block would break every later link, the record is tamper-resistant. Bitcoin, launched in January 2009, ran the first decentralized blockchain; NFTs, stablecoins and tokenized funds now use the same idea.
Key Takeaways
- A blockchain is a distributed ledger: blocks of transactions are chained together with cryptographic hashes, so past records cannot be quietly edited.
- Public blockchains such as Bitcoin and Ethereum are transparent, not encrypted; anyone can read the transactions, while private keys and digital signatures control who can move assets.
- Bitcoin uses proof of work; Ethereum switched to proof of stake on 15 September 2022, which cut its energy use by over 99%.
- Buying an NFT proves ownership of a blockchain record, not the copyright in the artwork unless the rights are transferred separately.
- Crypto is now regulated in major markets: the EU’s MiCA regulation has applied in full since 30 December 2024, and the US GENIUS Act for payment stablecoins was signed on 18 July 2025.
Cryptocurrency is one of the advancements that has made the most waves in both the tech field and the wider culture. Since the Bitcoin network launched on 3 January 2009, there has been a lot of conversation about cryptocurrencies. Then, non-fungible tokens (NFTs) hit the market, making it possible for people to mint, sell, and buy digital files of all kinds.
Cryptocurrency and NFTs are both made possible through blockchain technology. So, what is blockchain? What makes it significant? How is it used? Below are the basics of blockchain technology.
What is Blockchain?
Blockchain technology is a shared digital ledger (a type of database) whose records are linked and secured with cryptography, mainly hashing and digital signatures, rather than hidden by encryption. There isn’t one blockchain system, but many. Public blockchains such as Bitcoin and Ethereum are decentralized, while private and consortium blockchains are run by one organization or a group of organizations. It records batches of transactions, called blocks, and keeps copies across many computers (nodes); each block holds a cryptographic hash of the previous block, a timestamp and its transaction data. With blockchain, you can prove digital ownership over something. It is also used to mint a token and create an NFT.Whether it’s encrypted digital currency, a photo, a video file, or another digital asset, blockchain provides not just the ability to prove that you own it, but it also shows the breakdown of transactions in what they call an immutable ledger.
Immutable Ledger
An immutable ledger is a public database that cannot be edited. This essentially means that every time a cryptocurrency or an NFT is transferred, the transaction is recorded in the ledger. A recorded block cannot be changed retroactively without altering every block after it, which the rest of the network would reject; the main exception is a 51% attack, in which one party controls more than half of a network. Of course, it is always possible to hack into even encrypted channels, but it’s a lot more difficult when they are encrypted. Encryption is basically when the content and metadata of any digital file, website, or data is scrambled so other people can’t see it. It makes the hacking job a lot more difficult. Public blockchain data, however, is not encrypted: anyone can read the transactions, and the security comes from hashing, digital signatures and consensus. In practice, most losses happen off-chain, through hacked exchanges, stolen private keys and scams, rather than by rewriting the ledger itself.
Decentralization
Decentralization is inherent to immutable ledgers and blockchain technology, making cryptocurrency and NFTs also decentralized. Decentralization makes the underlying networks hard for any single government to control, but regulators can and do supervise the exchanges, brokers, wallet providers and stablecoin issuers that most people use to access them. Prices are set by supply and demand on trading venues, which is one reason crypto and NFT prices can swing sharply. Scarcity and hype have produced extreme prices for some NFTs and cryptocurrencies, while the benefit of a public blockchain is that no single entity controls the network. It goes without saying that this has made some big waves both in the tech communities and international politics.
Government Regulation
Each government has had to decide how to treat blockchain assets, and major jurisdictions now have dedicated rules: the European Union’s Markets in Crypto-Assets Regulation (MiCA) has applied in full since 30 December 2024, and the US GENIUS Act, signed on 18 July 2025, regulates payment stablecoins. Some have responded by launching central bank digital currencies (CBDCs), such as the Bahamas’ Sand Dollar, Nigeria’s eNaira and China’s digital renminbi, while others have banned crypto trading entirely; China’s complete ban on cryptocurrency trading and mining took effect on 24 September 2021. Whether blockchain is welcomed in a specific country or banned, regulating the networks themselves is hard, so most rules target the companies and intermediaries around them. It’s by design. Some supporters argue that heavy regulation undermines the point of a decentralized system, while regulators argue that consumer-protection rules are needed; the debate is ongoing. This begs the final question. What is blockchain really, beyond a digital database used as a public immutable ledger?
Crypto, NFTs, & Beyond
Blockchain technology represents the basis of decentralized assets. It makes assets outside of government and financial institutions possible. It gives the agency to the buyer, the seller, and the trader. Cryptocurrencies and NFTs are no longer the only significant assets recorded on blockchain ledgers: stablecoins reached a market capitalization of about $316 billion in October 2025, according to the Financial Action Task Force, and BlackRock launched its first tokenized fund, BUIDL, on the Ethereum network in March 2024. It’s an obscure part of the modern world that will continue to grow and become more and more relevant. One day, crypto and NFTs might be irrelevant, replaced by other forms of blockchain assets. All we can do is speculate on this matter.
Whatever you think about blockchain technology and the future of digital assets, there is no stopping the flow of progress. Instead of being afraid of the future, you should watch as it unfolds. Only then can we realize what needs to be done. Does blockchain need to be regulated? How? By whom? What do we want to use this technology for? Of course, making the rich richer doesn’t really help the wider society. How can crypto and NFTs become more accessible to the average person? Whatever you have in mind, this is all just the beginning of a digital asset revolution. How will the future unfold? You’ll have to standby to find out. No one knows for sure.
How Does a Blockchain Work, Step by Step?
A blockchain works by having many independent computers agree on one shared list of transactions. For a fuller introduction, see what blockchain technology is and how it is used. The basic cycle on a public blockchain looks like this:
- A user signs a transaction with a private key, which proves the user controls the funds or token being sent.
- The transaction is broadcast to the network’s nodes, which check the signature and that the sender has the balance.
- Valid transactions are grouped into a block. Each block contains a cryptographic hash of the previous block, a timestamp and the transaction data, usually organized as a Merkle tree.
- The network reaches consensus on the next block, through proof of work (mining) on Bitcoin or proof of stake on Ethereum.
- The block is appended and every node updates its copy. Changing that block later would change its hash and break the link to every block after it.
Public, Private, Consortium and Hybrid Blockchains
Not every blockchain is open to everyone. The four common types differ mainly in who can join and who validates transactions.
| Type | Who can participate | Typical use |
|---|---|---|
| Public (permissionless) | Anyone, with no access restrictions | Cryptocurrencies such as Bitcoin and Ethereum, NFTs, stablecoins |
| Private (permissioned) | Only participants authorized by one organization | Internal record-keeping inside a company |
| Consortium | A group of organizations that manage the network together | Shared records between banks or supply-chain partners |
| Hybrid | A mix of centralized and decentralized features | Systems that keep some data private and publish some openly |
Supply-chain tracking is one of the most discussed non-financial uses; our guide to blockchain in supply chain management covers it in more detail.
Proof of Work vs. Proof of Stake
A consensus mechanism is the rule a blockchain uses to decide which new block is valid. The two most widely used mechanisms compare as follows.
| Feature | Proof of work | Proof of stake |
|---|---|---|
| How blocks are chosen | Miners compete to solve a computationally intensive puzzle | Validators lock up (stake) coins and are selected to propose and attest to blocks |
| Best-known example | Bitcoin | Ethereum, since 15 September 2022 |
| Energy use | High | Far lower; Ethereum’s switch cut its energy use by over 99% |
As of 2026, Bitcoin’s reward for mining a block is 3.125 BTC, and its total supply is capped at 21 million coins. Our beginner guide to the Bitcoin mining process explains mining in more depth.
A Short Timeline of Blockchain, Crypto and NFTs
- 1991: Stuart Haber and W. Scott Stornetta describe a cryptographically secured chain of blocks for tamper-proof document timestamps.
- 31 October 2008: Satoshi Nakamoto publishes the white paper Bitcoin: A Peer-to-Peer Electronic Cash System.
- 3 January 2009: The Bitcoin network starts with the genesis block.
- May 2014: Kevin McCoy and Anil Dash create Quantum, the first known NFT.
- 30 July 2015: Ethereum launches, adding programmable smart contracts.
- January 2018: ERC-721, the first official NFT standard on Ethereum, is published.
- March 2021: Beeple’s Everydays: the First 5000 Days sells at Christie’s for $69.3 million.
- September 2021: El Salvador makes bitcoin legal tender; a January 2025 reform removed the obligation for businesses and the government to accept it.
- May 2022: The TerraUSD stablecoin breaks its peg, wiping out almost $45 billion of market value in a week.
- 15 September 2022: Ethereum completes the Merge and moves to proof of stake.
- January 2024: The first 11 US spot bitcoin exchange-traded funds begin trading.
- December 2024: Bitcoin’s price reaches $100,000 for the first time, and MiCA applies in full across the EU.
- March 2025: A US executive order establishes a strategic bitcoin reserve.
- 18 July 2025: The GENIUS Act, a US federal law for payment stablecoins, is signed.
- 1 July 2026: MiCA’s transitional period ends, so crypto-asset service providers serving EU clients need a MiCA license.
How Are Cryptocurrencies, NFTs and Stablecoins Different?
All three are tokens recorded on a blockchain, but they behave very differently.
| Asset | Fungible? | What gives it value | Example |
|---|---|---|---|
| Cryptocurrency | Yes, each unit is interchangeable | Market supply and demand; no issuer backing | Bitcoin, ether |
| NFT (non-fungible token) | No, each token is unique | What buyers will pay for a unique record; no guaranteed resale value | Digital art, collectibles, game items |
| Stablecoin | Yes | Aims to hold a stable value against an asset such as the US dollar, usually through reserves | Tether (USDT), USD Coin (USDC) |
| Tokenized fund or asset | Usually yes | The underlying real-world asset, such as short-term US Treasuries | BlackRock’s BUIDL fund |
According to the Bank for International Settlements, 90% of stablecoin market capitalization was in Tether or USDC as of July 2025. For background, see our article on the rise of stablecoins and their influence on the crypto market.
What Do You Actually Own When You Buy an NFT?
An NFT is a unique digital identifier recorded on a blockchain that certifies ownership of that record. Buying an NFT does not by itself give the buyer the copyright or other intellectual property rights in the underlying image or video; those rights stay with the creator unless they are explicitly transferred.
The NFT market has also been volatile. Daily NFT sales had fallen 92% from their September 2021 level by May 2022, and one widely reported analysis found that by September 2023 over 95% of NFT collections had zero monetary value. The record sales listed in our roundup of the most expensive NFTs ever sold are exceptions, not the norm.
What Are the Main Risks of Blockchain Assets?
The blockchain ledger itself is hard to alter, but the people and services around it are frequent targets. The main risks are:
- Scams and fraud. The FBI’s Internet Crime Complaint Center reported that complaints involving cryptocurrency accounted for more than $11 billion in losses in 2025, a 22% increase from 2024, in its annual report released in April 2026.
- Lost or stolen keys. Whoever holds the private key or seed phrase controls the assets, and blockchain transactions generally cannot be reversed. See our guide on how to secure a Bitcoin seed phrase.
- Price volatility. Cryptocurrency and NFT prices can fall sharply, as the 2022 TerraUSD collapse showed.
- 51% attacks. On smaller networks, one party that controls more than half of the mining or staking power can manipulate the record.
- Legal differences. Rules vary by country, from licensed markets in the EU to an outright ban on trading in China.
This article explains how the technology works and is not investment advice. Before buying any crypto asset, check that the platform is authorized by your national financial regulator.
Frequently Asked Questions
What is blockchain technology in simple terms?
Blockchain technology is a shared record book kept on many computers at once. New entries are added in blocks, each linked to the one before it by a cryptographic hash, so nobody can quietly change an old entry without the rest of the network noticing.
Is blockchain data encrypted?
Public blockchain data is generally not encrypted. Transactions on networks such as Bitcoin and Ethereum can be read by anyone; cryptography is used for hashing blocks together and for digital signatures that prove who authorized a transaction.
Who invented blockchain?
Stuart Haber and W. Scott Stornetta described a cryptographically secured chain of blocks in 1991. The first decentralized blockchain was conceived by Satoshi Nakamoto in 2008 and went live with Bitcoin on 3 January 2009.
Does buying an NFT give me the copyright?
No, buying an NFT does not automatically transfer copyright. An NFT proves ownership of a blockchain record; intellectual property rights in the artwork stay with the creator unless they are transferred explicitly.
Is cryptocurrency regulated?
Cryptocurrency is regulated in many major markets. The EU’s Markets in Crypto-Assets Regulation has applied in full since 30 December 2024, the US GENIUS Act has governed payment stablecoins since it was signed on 18 July 2025, and China has banned crypto trading and mining since September 2021.
What is blockchain used for besides crypto and NFTs?
Beyond cryptocurrency and NFTs, blockchain is used for stablecoins, tokenized funds such as BlackRock’s BUIDL, supply-chain tracking and shared records between organizations using private or consortium blockchains.
