Frequently Asked Questions

A blockchain is a type of database that stores information in blocks which are linked together in chronological order. Each block contains a batch of records and a reference to the block before it. Because every participant on the network holds a copy, and because changing one block would require changing every subsequent block, the data is highly resistant to tampering. Think of it as a shared notebook where everyone has an identical copy and new pages can only be added, never erased or rewritten.

Traditional databases are typically managed by a single entity that controls who can read, write and modify data. A blockchain distributes that control across many participants. Data is append-only, meaning entries cannot be edited or deleted once confirmed. This design is useful when multiple parties need to share a trusted record without relying on a single administrator. Additionally, blockchains use cryptographic techniques to link blocks together, making retroactive alterations computationally impractical.

A consensus mechanism is the process by which network participants agree on the current state of the ledger. It ensures that all copies of the distributed database remain synchronised, even when some participants may be offline or acting dishonestly. Common examples include proof-of-work, where participants solve computational puzzles, and proof-of-stake, where participants are selected based on the amount of tokens they hold and are willing to lock up as collateral. Each mechanism involves different trade-offs in terms of energy consumption, speed and security guarantees.

A public blockchain is open for anyone to join, read and participate in the validation process. A private blockchain restricts access to a defined group of participants, and a designated authority typically controls who can write data. There are also consortium blockchains, which sit between these two models: multiple organisations share administrative responsibility. Public blockchains prioritise openness and censorship resistance, while private blockchains are often used by organisations that require controlled access and higher transaction speeds within a trusted group.

Decentralisation refers to the distribution of control and decision-making across a network, rather than concentrating it in a single entity. In a decentralised blockchain, no single participant has the authority to unilaterally alter the ledger or censor transactions. The degree of decentralisation varies significantly between different blockchain implementations. Some networks have thousands of independent validators spread globally, while others rely on a smaller set of known participants.

A node is any computer that participates in a blockchain network. Nodes store a copy of the blockchain data and communicate with each other to propagate new transactions and blocks. Full nodes maintain the entire history of the blockchain, while light nodes store only a subset of data. Validator nodes (or miner nodes, depending on the consensus mechanism) are specifically responsible for verifying transactions and proposing new blocks to the network.

No. While blockchain technology gained prominence through its use in cryptocurrency networks, the underlying concept of a distributed, tamper-evident ledger has applications across many fields. These include supply chain management, healthcare record keeping, intellectual property registration, identity verification, environmental data tracking and voting system research, among others. The technology is being explored by governments, academic institutions and private organisations worldwide for purposes that extend well beyond digital currencies.

A cryptographic hash function takes an input of any size and produces a fixed-length output (called a hash or digest). The same input always produces the same output, but even a tiny change in the input results in a completely different hash. Crucially, it is computationally infeasible to reverse the process and determine the original input from its hash alone. Blockchain networks use hash functions to link blocks together: each block contains the hash of the previous block, creating a chain where altering any block would invalidate all subsequent hashes.

Public-key cryptography (also called asymmetric cryptography) uses a pair of mathematically related keys: a public key and a private key. The public key can be shared openly, while the private key must remain confidential. In blockchain systems, a user signs a transaction with their private key, and anyone on the network can verify the signature using the corresponding public key. This proves that the transaction was authorised by the key holder without revealing the private key itself. The security of this system depends on the mathematical difficulty of deriving the private key from the public key.

A Merkle tree is a data structure that organises a collection of data items into a tree of hashes. Each leaf node contains the hash of a data item (such as a transaction). Parent nodes contain the hash of their two child nodes combined. This continues up to a single root hash (the Merkle root), which effectively summarises all the data below it. Merkle trees allow efficient and secure verification of data integrity. If even one transaction is altered, the Merkle root changes, making tampering detectable. They also enable light nodes to verify specific transactions without downloading the entire block.

A zero-knowledge proof is a cryptographic method that allows one party (the prover) to demonstrate to another party (the verifier) that a statement is true without revealing any information beyond the validity of the statement itself. In blockchain contexts, zero-knowledge proofs can be used to verify transactions while preserving privacy. For example, a user could prove they have sufficient funds to complete a transfer without disclosing their total balance. This technology is also being explored as a scaling technique, where computations are performed off-chain and verified on-chain through compact proofs.

Web3 is a broad term used to describe a vision of the internet where applications and services are built on decentralised protocols rather than being controlled by individual companies. In this model, users interact with applications through blockchain-based systems, often using cryptographic wallets instead of traditional username-password accounts. Proponents suggest this approach could give users more control over their data and digital identities. The concept remains a subject of ongoing technical development and debate about its practical scope and limitations.

A decentralised application (dApp) is a software application that runs at least partially on a decentralised computing system such as a blockchain. Unlike traditional applications where the backend logic resides on servers controlled by a single entity, a dApp's core logic is encoded in smart contracts on a blockchain. The frontend (user interface) may still be hosted conventionally. dApps span a range of categories, including governance platforms, record-keeping systems and identity management tools. The level of decentralisation varies from one dApp to another.

Layer 2 solutions are protocols built on top of an existing blockchain (the "Layer 1") designed to increase transaction throughput without compromising the security guarantees of the underlying chain. They work by processing transactions off the main chain and periodically settling results back to it. Examples include rollups (which bundle many transactions into a single Layer 1 transaction), state channels (which allow participants to conduct multiple transactions off-chain) and sidechains (separate blockchains that run in parallel). Each approach involves different trade-offs regarding decentralisation, cost and complexity.

Decentralised governance refers to systems where decisions about a protocol or platform are made collectively by its community of token holders or participants, rather than by a central authority. Proposals are typically submitted on-chain, discussed publicly, and voted upon using governance tokens. The outcomes of votes can trigger automatic changes to the protocol through smart contracts. While this model aims to distribute decision-making power more broadly, it also introduces challenges around voter participation, coordination and the potential for concentrated token ownership to influence outcomes.