Blockchain and Decentralized Consensus
A blockchain is a distributed ledger—a shared database maintained by a network of computers rather than a central authority. Each block contains a batch of transactions that is cryptographically linked to the previous block, creating an immutable chain. Bitcoin uses proof-of-work consensus: miners compete to solve complex mathematical puzzles, and the winner adds the next block and receives newly minted bitcoin as reward. Ethereum transitioned to proof-of-stake in 2022: validators lock up (stake) ETH as collateral to earn the right to validate transactions, consuming 99.9 percent less energy than proof-of-work. The key innovation is trustless verification—parties can transact without needing a bank, government, or intermediary to validate the exchange.