Block

In a decentralized network, individual transactions are not recorded sequentially; instead, they are batched together into groups known as blocks. Each block has a limited data capacity. Once a new block is finalized, it is recorded on the ledger and cryptographically linked to the block preceding it. This creates an immutable chain of information — a blockchain. Each network participant has access to this same permanent record of transaction data, which allows the distributed ledger to function coherently.

Blocks are typically made up of two parts: a header and a body. The block body contains the transaction data, while the block header contains its metadata. Each block is like one page of the digital ledger, covering a selection of transactions processed at that specific moment.

However, the network also needs some way to link that page to all of the prior ones — this is how it proves its authenticity. This is done through a fingerprint called a hash, derived from the block directly preceding the current one.

If any data in any past block were edited, this would inevitably alter its hash as well. This would break the chain of authentications, proving that the alterations are invalid. The network would therefore reject these changes, meaning that all past records on a blockchain are immutable by nature.

The process of creating a block begins when users broadcast transactions to the network. Pending transactions sit in a “mempool” (memory pool) until they are picked up by a block producer. This producer checks the validity of the transactions, then assembles them into a block.

When a new block is produced, the wider network must collectively agree on its validity. This is done via a consensus mechanism, which checks the authenticity of the new block, then distributes rewards to its producer. These consensus mechanisms vary by network: bitcoin uses proof of work, which requires miners to dedicate computing power to solving complex mathematical problems; Ethereum instead uses proof of stake, which requires network validators to lock up ETH as collateral.