What a blockchain actually keeps track of
Not files, not coins in a vault — a single ledger of who can spend what, agreed on by everyone at once.
At a glance
- A coin is not stored anywhere; it is a balance the ledger's current state says you can spend.
- A block chains to the one before it by including that block's hash — change an old entry and every hash after it breaks.
- A wallet holds a private key, not coins. Losing the key does not erase your balance, only your ability to move it.
There is no coin sitting anywhere. What exists is a ledger: an ordered list of transfers, and a rule for computing, from that list, how much any address is currently entitled to spend. “Owning” a coin means the ledger's current state says so, nothing more.
The hard problem a blockchain solves is getting thousands of computers, run by strangers who don't trust each other, to agree on the same ordering of that list without a referee. That agreement mechanism — proof of work, proof of stake, whichever variant — is the entire product. Everything else is bookkeeping.
A block is just a batch of pending transfers plus a pointer back to the previous block, chained by a cryptographic hash. Changing an old transfer would change its hash, which would break every block chained after it — which is what makes the history expensive to rewrite and cheap to verify.
A wallet does not store coins either. It stores a private key, which is the ability to produce a valid signature authorising the ledger to update. Lose the key and the ledger's record of your balance still exists; you simply lose the only way to move it.
Key terms
- Ledger
- The full ordered history of transfers that every participant computes the same balances from.
- Hash
- A short fixed-length fingerprint of a block's contents; changing anything in the block changes the hash.
- Private key
- The secret value that produces a valid signature authorising a spend from an address.
Frequently asked
If nothing is really stored, what happens if I lose internet access?
Nothing changes about your balance — it is defined by the network's shared history, not by anything on your device. Losing access just means you temporarily can't see or move it.
Can a blockchain be hacked to change old transactions?
In theory, if someone controlled enough of the network's computing or staked value to outpace everyone else's chain. In practice, on large established networks this is prohibitively expensive.
Why do people say ‘not your keys, not your coins’?
Because the ledger only cares which key authorised a transfer. If an exchange holds your key, it is the exchange's signature that moves the funds, not yours.