<p>Blockchain, a foundational technology of cryptocurrencies like <a href="/NewSite/encyclopedia/bitcoin/" class="ency-link">Bitcoin</a>, is a decentralized, digital ledger that records transactions across a network of computers. It's essentially a database that stores information in a way that makes it very difficult to change or hack.</p>

<h2>How It Works</h2>
<p>Here's a simplified explanation of how blockchain works:</p>
<ul>
  <li>Every time a transaction occurs, it's broadcast to a network of computers, known as nodes.</li>
  <li>These nodes verify the transaction using complex mathematical algorithms.</li>
  <li>Once verified, the transaction is added to a 'block' along with other transactions.</li>
  <li>This block is then added to the existing 'chain' of blocks, creating an immutable record of all transactions.</li>
  <li>To incentivize nodes to participate, they are rewarded with <a href="/NewSite/encyclopedia/cryptocurrency/" class="ency-link">cryptocurrency</a> for each block they add to the chain.</li>
</ul>

<h2>Why It Matters</h2>
<p>Blockchain has several practical implications:</p>
<ul>
  <li><strong>Security:</strong> Once a transaction is added to the blockchain, it cannot be altered retroactively without altering all subsequent transactions, which requires consensus of the network majority.</li>
  <li><strong>Transparency:</strong> Every transaction is visible to all participants, increasing trust and reducing the need for intermediaries.</li>
  <li><strong>Decentralization:</strong> Blockchain operates on a network of nodes, not owned or controlled by any single entity, making it resistant to censorship and downtime.</li>
</ul>
<p>These features make blockchain a promising technology for various applications beyond cryptocurrency, such as supply chain management, digital identity verification, and more.</p>