The following content is from Wikipedia.
A blockchain — originally block chain — is a distributed database that maintains a continuously-growing list of records called blocks secured from tampering and revision. Each block contains a timestamp and a link to a previous block.
The blockchain is a core component of the digital currency bitcoin—conceived in 2008 and first implemented in 2009—where it serves as the public ledger for all transactions. In the bitcoin case, every compatible client is able to connect to the network, send new transactions to it, verify transactions, and take part in the competition to create new blocks. The competition creating new blocks is known as mining. Decentralised consensus can be achieved for the first time with a blockchain. The bitcoin design has been the inspiration for other applications.
In the context of bitcoin, the blockchain is a digital ledger that records every bitcoin transaction that has ever occurred. A blockchain consists of blocks that hold batches of valid transactions. Each block includes the hash of the prior block in the blockchain, linking the two. The linked blocks form a chain. Variants of this format were used previously, for example in Git, and it is not by itself sufficient to qualify as a blockchain. The blockchain is parsed by software to extract relevant information. A blockchain implementation consists of two kinds of records: transactions and blocks.
In addition to a secure hash based history, any blockchain database has a specified algorithm for scoring different versions of the history so that one with a higher value can be selected over others. Peers supporting the database don’t have exactly the same version of the history at all times, rather they keep the highest scoring version of the database that they currently know of. Whenever a peer receives a higher scoring version (usually the old version with a single new block added) they extend or overwrite their own database and retransmit the improvement to their peers. There is never an absolute guarantee that any particular entry will remain in the best version of the history forever, but because blockchains are typically built to add the score of new blocks onto old blocks and there are incentives to only work on extending with new blocks rather than overwriting old blocks, the probability of an entry becoming superseded goes down as more blocks are built on top of it, eventually becoming very low.
By storing data across its network, the blockchain eliminates the risks that come with data being held centrally. Its network lacks centralized points of vulnerability that computer hackers can exploit. Today’s Internet has security problems that are familiar to everyone. We all rely on the “username/password” system to protect our identity and assets online. Blockchain security methods use cryptographic technology.
The basis for decentralization is the use of public and private keys. A public key (a long, randomly-generated string of numbers) is a user’s address on the blockchain. Bitcoins sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their bitcoin or other digital assets. Data stored on the blockchain is generally considered incorruptible.
Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication and computational trust. No centralized “official” copy exists and no user is “trusted” more than any other. Transactions are broadcast to the network using software. Mining nodes validate transactions, add them to the block they’re creating, and then broadcast the completed block to other nodes. Blockchains use various time-stamping schemes, such as proof-of-work to serialize changes.
Since all early blockchains were permissionless, controversy has arisen over whether permissioned databases of chained blocks of data should even be considered blockchains. An issue in this ongoing debate is whether a private system with verifiers tasked and authorized (permissioned) by a central authority should be considered a blockchain.
Proponents of permissioned or private chains argue that the term “blockchain” may be applied to any data structure that batches data into time-stamped blocks. These blockchains serve as a distributed version of multiversion concurrency control (MVCC) in databases. Just as MVCC prevents two transactions from concurrently modifying a single object in a database, blockchains prevent two transactions from spending the same single output in a blockchain.
Opponents say that permissioned systems resemble traditional corporate databases, not supporting decentralized data verification, and that such systems are not hardened against operator tampering and revision. The Harvard Business Review defines blockchain as a distributed ledger or database open to anyone, and Computerworld claims that “much of [blockchain hype] is nothing more than snake oil and spin”.
Both bitcoin and Ethereum are open (public) blockchains. As of September 2016, bitcoin has the highest market capitalization while Ethereum is second. Both of them currently secure their blockchain by requiring new entries including a proof of work. Ethereum plans to switch to a proof-of-stake system in the future.