How blockchain works

At its heart, a Blockchainis a cryptographic protocol that allows separateparties to increase the trustworthiness of a transaction because the ledger entries in its database cannot be easily falsified (i.e. once data is written it is extremely difficult to change, albeit provided the data was correct from the outset). This “immutability”is due to a combination of factors including the cryptography used in a Blockchain, its consensus/validation mechanism and its distributed nature. As a result of this immutability, Blockchain systems can be used as an independent umpire in processes that might otherwise expose participants to the risk of one party not living up to its contractual obligations (counterparty risk) and where third-party guarantors are reluctant to intervene and assume part of that risk.