What is a blockchain?

A blockchain is a shared record, or ledger, of transactions. Instead of one company keeping the books, many computers around the world each keep a copy and agree on every update. New entries are added in batches called blocks, and each block is linked to the one before it, like links in a chain. That’s where the name comes from.

Why does that matter? Today, most records are kept by one trusted party. Your bank keeps your balance. A fund keeps its list of owners. When two firms trade, each updates its own books, and then they check that the books match, which takes time and costs money. With a blockchain, everyone works from the same record at the same time. That can mean faster settlement (the moment a trade is truly complete), fewer errors from records that don’t match, and a history that’s very hard to change after the fact.

Those same features bring new things to think about. Entries are hard to reverse, so a mistake can be permanent. A public blockchain is run by many independent computers, not one company you can call for help. Whether these points are risks for you, and how big they are, depends on your role and what you’re doing with the blockchain. We come back to this in Risk basics.