How Blockchain Really Works (in Simple Terms)

You’ve probably heard the word “blockchain” thrown around in conversations about Bitcoin, digital currencies, or the future of technology. Maybe you’ve nodded along, pretending to grasp it, while secretly wondering what on earth everyone’s talking about. You’re not alone. Blockchain sounds intimidatingly technical, like something reserved for computer scientists and cryptography experts.

But here’s the thing: blockchain isn’t nearly as complicated as it sounds. Strip away the jargon, and you’ll find a surprisingly elegant system that’s changing how we store, share, and trust information. Whether you’re curious about cryptocurrency, interested in emerging tech, or simply tired of feeling left out of the conversation, understanding blockchain can open doors to a whole new world of digital possibilities.

In this guide, you’ll discover exactly how blockchain works, from its core components to the step-by-step journey of a transaction. No confusing technical speak, just clear explanations that actually make sense. By the end, you’ll not only understand blockchain but be able to explain it to others with confidence.

What Is Blockchain? A Straightforward Definition

At its heart, blockchain is a type of database, but not the kind you’re used to. Instead of storing information in traditional tables managed by a single authority, blockchain organises data into “blocks” that are chained together in chronological order. Each block contains a batch of transactions, and once it’s added to the chain, it becomes part of a permanent, unchangeable record.

Think of it like a shared notebook that everyone in a group can read, but no one can secretly edit past entries. Every time someone adds a new page (block), it references the previous page with a unique code. If anyone tried to alter an earlier page, the codes wouldn’t match up, and everyone would immediately know something fishy happened.

What makes blockchain special is that it’s decentralised and distributed. Instead of one company or organisation controlling the database, copies of the entire blockchain exist across hundreds or thousands of computers (called nodes) around the world. This network structure means no single entity has ultimate power over the information, making the system more transparent, secure, and resistant to tampering.

Blockchain essentially creates trust through technology. You don’t need to rely on a bank, government, or middleman to verify transactions, the network does it collectively. That’s why blockchain has gained traction far beyond cryptocurrency, finding applications in supply chains, healthcare, voting systems, and more.

The beauty of blockchain lies in its simplicity paired with robust security. It’s a solution to an age-old problem: how do you create a record-keeping system that’s both transparent and tamper-proof, without requiring everyone to trust a central authority?

The Core Components of Blockchain Technology

To truly understand how blockchain works, you need to get familiar with its three fundamental building blocks: blocks, the chain, and nodes. Each component plays a distinct role in making the system function smoothly and securely.

Blocks: The Building Blocks of the Chain

A block is essentially a container, a digital package that holds a batch of transaction data. Imagine it as a page in a ledger book, filled with recent transactions waiting to be permanently recorded.

Each block contains three main elements:

• Transaction data: The actual information being recorded, such as “Alice sent 2 Bitcoin to Bob” or “Product X moved from warehouse to retailer.”
• A timestamp: When the block was created, providing chronological context.
• A cryptographic hash: A unique digital fingerprint generated from the block’s contents. This hash acts as the block’s identity, change even one tiny detail in the transaction data, and the entire hash changes.

Blocks have a size limit, which means they can only hold so many transactions. Once a block reaches capacity, it gets sealed and added to the chain, and a new block begins collecting the next batch of transactions.

The Chain: How Blocks Connect to Each Other

The “chain” in blockchain comes from how these blocks link together sequentially. Each new block doesn’t just contain its own hash, it also stores the hash of the previous block. This creates an unbroken connection stretching all the way back to the very first block, often called the “genesis block.”

This linking mechanism is what makes blockchain so secure. If someone tried to alter data in an old block, its hash would change. But since the next block references that original hash, the chain would break, a red flag visible to everyone on the network. You’d need to recalculate and alter every subsequent block to cover your tracks, which is computationally near-impossible on a large, active network.

Think of it like a trail of dominoes, where each piece depends on the one before it. Knock one out of place, and the entire pattern collapses, revealing the tampering instantly.

Nodes: The Network Keeping Everything Running

Nodes are the computers or devices that participate in the blockchain network. Each node maintains its own complete copy of the entire blockchain, constantly updating as new blocks are added.

Nodes perform several critical functions:

• Verification: When a new transaction is broadcast, nodes check whether it’s legitimate according to the network’s rules (e.g., does the sender actually have the funds?).
• Storage: Nodes store the entire transaction history, ensuring redundancy and transparency.
• Communication: Nodes share information with each other, keeping everyone synchronised and up to date.

Because there are so many nodes spread across different locations, the blockchain doesn’t rely on any single computer. If one node goes offline or gets compromised, thousands of others continue operating normally. This decentralisation is one of blockchain’s greatest strengths, there’s no single point of failure or control that can bring the whole system down.

How a Transaction Actually Happens on the Blockchain

Now that you know the building blocks, let’s walk through exactly what happens when you make a transaction on a blockchain. We’ll use cryptocurrency as an example since it’s the most common use case, but the process applies to any blockchain-based system.

Step 1: Initiating the Transaction

It all starts when you decide to send something, say, a Bitcoin payment to a friend. Using your digital wallet (which holds your private key, essentially your digital signature), you create a transaction request. This request includes key details: how much you’re sending, your friend’s blockchain address (their public key), and your digital signature proving you authorise the transfer.

Your wallet software bundles this information together and prepares it for the network. At this point, the transaction exists but hasn’t been confirmed yet, it’s like writing a cheque that hasn’t cleared.

Step 2: Broadcasting to the Network

Once created, your transaction is broadcast to the entire blockchain network. It travels from your node (or the node your wallet connects to) and spreads to other nodes across the globe within seconds. This broadcasting ensures that everyone on the network becomes aware of your pending transaction.

Your transaction joins a pool of other unconfirmed transactions, all waiting to be processed and added to the blockchain. Think of it as joining a queue at a busy shop, you’re in line, but you haven’t been served yet.

Step 3: Validation and Verification

Here’s where the magic happens. Nodes on the network (specifically, certain nodes called miners or validators, depending on the consensus mechanism) examine your transaction to verify its legitimacy. They check:

• Do you actually have the funds you’re trying to send? They scan the blockchain history to confirm your wallet balance.
• Is your digital signature valid? This proves you’re the rightful owner authorising the transaction.
• Are you trying to double-spend? The network ensures you haven’t already spent the same funds elsewhere.

This verification process uses cryptographic techniques and follows the network’s consensus rules. If everything checks out, your transaction is marked as valid and ready for inclusion in a new block. If something’s wrong, say, insufficient funds, the transaction gets rejected.

Step 4: Adding to the Blockchain

Once validated, your transaction gets bundled with other verified transactions into a new block. The node responsible for creating this block (the miner or validator) performs additional work to secure the block, then broadcasts it to the entire network.

Other nodes verify that this new block is legitimate and that it correctly references the previous block’s hash. If consensus is reached, meaning the majority of nodes agree the block is valid, it gets permanently added to the blockchain. Your transaction is now confirmed and irreversible.

From this moment, anyone can look up your transaction on the blockchain and see that it happened. Your friend’s wallet updates to show the received funds, and the entire network maintains a permanent record of the transfer. The whole process, from initiation to confirmation, typically takes anywhere from a few seconds to several minutes, depending on the specific blockchain and network activity.

What Makes Blockchain Secure?

You might be wondering: if blockchain is so transparent and distributed, what stops malicious actors from messing with it? The answer lies in several clever security features working together. Let’s break down the main defences that make blockchain one of the most secure technologies available.

Cryptographic Hashing Explained Simply

Cryptographic hashing is the backbone of blockchain security. A hash function takes any amount of data, whether it’s a single letter or an entire book, and converts it into a fixed-length string of characters (the hash). This process is one-way: you can easily generate a hash from data, but you can’t reverse-engineer the original data from the hash.

What makes this powerful for blockchain is that even the tiniest change to the input data completely transforms the hash. Change one digit in a transaction amount, and you get an entirely different hash, something that immediately alerts the network to tampering.

Each block’s hash acts like a digital seal. Since every block also contains the previous block’s hash, altering any historical block would create a cascade of mismatched hashes throughout the chain. Anyone checking the blockchain would instantly spot the inconsistency. It’s mathematically near-impossible to alter old records without detection, especially on a large, active network.

Decentralisation: No Single Point of Failure

Traditional databases typically operate from central servers controlled by a single organisation. If that server gets hacked, corrupted, or shut down, the entire system can fail or be compromised. It’s a single point of failure, a vulnerability that’s easy to exploit.

Blockchain flips this model completely. Instead of one central authority holding all the data, thousands of nodes across the world each maintain their own complete copy of the blockchain. To successfully attack the network, a hacker would need to simultaneously compromise more than half of these nodes, a feat that’s prohibitively expensive and logistically near-impossible for well-established blockchains.

This decentralisation also means no single entity can arbitrarily change the rules or censor transactions. Power is distributed among all participants, creating a more democratic and resilient system. If a few nodes go offline, get attacked, or act maliciously, the majority of honest nodes keep the network running smoothly.

Immutability: Why Past Records Can’t Be Changed

Immutability means that once data is written to the blockchain, it’s essentially permanent. You can’t go back and edit, delete, or forge historical records, they’re locked in place by the cryptographic chain linking all blocks together.

This permanence comes from the combination of hashing and consensus. To alter an old transaction, you’d need to:

1. Recalculate the hash for the block containing that transaction.
2. Recalculate the hashes for every subsequent block (since they all reference each other).
3. Convince the majority of the network to accept your altered version as the true chain.

For large, active blockchains with thousands of nodes constantly adding new blocks, this is practically impossible. The computational power and coordination required far exceed what any individual or even most organisations could muster.

Immutability creates trust in the historical record. You can confidently look back at any transaction from years ago, knowing it hasn’t been tampered with. This makes blockchain ideal for applications where audit trails and accountability matter, financial records, supply chain tracking, legal contracts, and more.

Consensus Mechanisms: How the Network Agrees

With thousands of nodes operating independently across the globe, how does a blockchain network reach agreement on what’s valid and what gets added next? The answer is consensus mechanisms, the rules and procedures that allow distributed nodes to coordinate without a central authority. Let’s look at the two most common approaches.

Proof of Work: The Original Consensus Model

Proof of Work (PoW) is the consensus mechanism that Bitcoin pioneered. It’s based on computational effort, nodes called miners compete to solve complex mathematical puzzles, and the first one to find the solution gets to create the next block and earn a reward.

Here’s how it works in practice:

When transactions are ready to be added to the blockchain, miners gather them into a proposed block. They then race to find a special number (called a nonce) that, when combined with the block’s data and run through a hash function, produces a hash meeting specific criteria, usually a hash that starts with a certain number of zeros.

Finding this nonce requires trial and error, testing millions or billions of possibilities until one works. It’s like trying to guess a combination lock by methodically testing every possible code, tedious, time-consuming, and energy-intensive, but straightforward to verify once the correct answer is found.

Once a miner discovers a valid nonce, they broadcast their block to the network. Other nodes quickly verify the solution (which is easy compared to finding it), and if everything checks out, they add the block to their copy of the blockchain. The successful miner receives a reward, newly created cryptocurrency plus transaction fees.

Proof of Work’s strength lies in its security. Attacking the network would require controlling more computing power than all honest miners combined (a so-called “51% attack”), which is prohibitively expensive for established blockchains. But, PoW has a notable downside: it consumes enormous amounts of electricity, raising environmental concerns.

Proof of Stake: A More Energy-Efficient Alternative

Proof of Stake (PoS) offers a different approach that eliminates the energy-hungry mining process. Instead of competing through computational work, validators are chosen to create new blocks based on how much cryptocurrency they “stake”, essentially, how much they’ve locked up as collateral.

Think of it as putting down a deposit that proves you have skin in the game. The more tokens you stake, the higher your chances of being selected to validate the next block. If you act honestly and follow the rules, you earn rewards in the form of transaction fees or newly issued tokens. But if you try to cheat or validate fraudulent transactions, you lose part or all of your staked tokens, a financial penalty that discourages bad behaviour.

Proof of Stake networks typically choose validators through a combination of factors: the size of their stake, how long they’ve been staking, and sometimes an element of randomness to prevent the wealthiest participants from dominating completely.

The main advantage of PoS is energy efficiency. Since there’s no computational race requiring massive processing power, PoS networks consume a fraction of the electricity that PoW networks do, sometimes 99% less. This makes PoS more environmentally sustainable and potentially faster, as blocks can be created without waiting for puzzle-solving.

Ethereum, one of the largest blockchain platforms, transitioned from Proof of Work to Proof of Stake in 2022, signalling a broader industry shift towards energy-efficient consensus mechanisms. Both models have their strengths, but PoS is increasingly seen as the future for new blockchain networks prioritising sustainability alongside security.

Different Types of Blockchain Networks

Not all blockchains are created equal. Depending on who can access and participate in the network, blockchains fall into different categories, each with distinct characteristics, advantages, and use cases.

Public Blockchains

Public blockchains are completely open networks where anyone can participate without needing permission. You can download the software, run a node, submit transactions, and even become a validator or miner, all without asking anyone’s approval or revealing your identity.

Bitcoin and Ethereum are the most famous examples. These networks prioritise transparency and decentralisation above all else. Every transaction is visible to anyone who wants to look, creating a completely open audit trail. While wallet addresses are pseudonymous rather than directly tied to real-world identities, the transaction history is permanently public.

Public blockchains are ideal when:

• Trust is scarce: Participants don’t know or necessarily trust each other, so the network’s transparency and security mechanisms provide assurance.
• Censorship resistance matters: No single entity can block transactions or shut down the network.
• Openness is valuable: Anyone, anywhere should be able to participate without barriers.

The trade-offs? Public blockchains tend to be slower than private alternatives (because reaching consensus among thousands of unknown nodes takes time), and they offer less privacy since all transactions are visible.

Private Blockchains

Private blockchains, sometimes called permissioned blockchains, restrict who can participate. A central organisation or consortium controls access, deciding who can join the network, submit transactions, and validate new blocks.

Think of it like a private club versus a public park. In a private blockchain, you need an invitation and approval to get through the door. Once inside, the network might still use blockchain’s core features, distributed ledgers, cryptographic security, consensus mechanisms, but in a controlled environment.

Private blockchains are common in enterprise settings where organisations want blockchain’s benefits (tamper-proof records, distributed verification, efficiency) without fully opening their data to the public. Banks, supply chain networks, and healthcare organisations often prefer private blockchains for internal operations.

Advantages include:

• Speed: Fewer nodes reaching consensus means faster transaction processing.
• Privacy: Transaction details can remain confidential among authorised participants.
• Control: The governing organisation can set specific rules, compliance requirements, and upgrade processes.

But, private blockchains sacrifice some of blockchain’s core philosophy. With fewer nodes and centralised control, they’re potentially more vulnerable to manipulation and less censorship-resistant than their public counterparts. They exist on a spectrum between traditional centralised databases and fully decentralised blockchains, offering a middle ground that suits certain business needs.

Some blockchain networks even blend the two models, creating hybrid or consortium blockchains where multiple organisations jointly control a semi-private network. The key is matching the blockchain type to your specific needs, complete openness and decentralisation, or controlled access with enhanced privacy.

Common Misconceptions About Blockchain

Blockchain has generated enormous hype, and with hype comes confusion. Let’s clear up some of the most persistent myths and misconceptions that might be clouding your understanding.

“Blockchain is only for cryptocurrency.”

This is probably the biggest misunderstanding. Yes, Bitcoin introduced blockchain to the world, and cryptocurrency remains its most famous application. But blockchain is fundamentally a secure, distributed ledger system, a way to record and verify any kind of information, not just financial transactions.

Companies use blockchain to track products through supply chains, ensuring authenticity and preventing counterfeits. Governments explore blockchain-based voting systems to increase election security and transparency. Healthcare organisations experiment with blockchain to securely share medical records across institutions while maintaining patient privacy. Smart contracts, self-executing agreements coded onto blockchains, can automate everything from insurance claims to property transfers.

Cryptocurrency is just one use case among many. Thinking blockchain equals Bitcoin is like thinking the internet equals email, you’re missing the much bigger picture.

“Blockchain transactions are completely anonymous.”

Not quite. Most blockchain transactions are pseudonymous, not anonymous. Your transactions are linked to a wallet address, a long string of letters and numbers, rather than your real name. But here’s the catch: the entire transaction history tied to that address is publicly visible and permanent.

If someone can connect your wallet address to your real-world identity (through an exchange that requires identification, for instance), they can potentially trace all your past and future transactions. Blockchain analysis firms specialise in exactly this kind of detective work, helping law enforcement track criminal activity.

Some blockchains, like Monero and Zcash, specifically focus on privacy and carry out additional cryptographic techniques to obscure transaction details. But the major blockchains like Bitcoin and Ethereum offer transparency, not anonymity. That transparency is actually a feature for many use cases, it’s what enables auditing and accountability.

“Blockchain is unhackable and completely secure.”

Blockchain is extraordinarily secure, but it’s not invincible. The blockchain protocol itself is extremely difficult to compromise, especially for large, established networks. But vulnerabilities exist elsewhere in the ecosystem.

Wallets can be hacked if users don’t protect their private keys properly. Smart contracts can contain coding bugs that hackers exploit (as has happened multiple times, resulting in millions lost). Cryptocurrency exchanges, which are centralised businesses, not blockchains themselves, have been hacked repeatedly.

Smaller blockchains with fewer nodes and less computing power are also more vulnerable to 51% attacks, where a malicious actor gains control of the majority of the network’s power and can manipulate transactions.

Blockchain significantly raises the security bar, but it doesn’t eliminate risk entirely. Users still need to follow good security practices, and organisations building on blockchain must code carefully and audit thoroughly.

“Blockchain will replace all traditional databases.”

Not every problem needs a blockchain solution. Traditional centralised databases are faster, cheaper, and more efficient for many purposes, especially when you have a trusted central authority and don’t need the transparency or decentralisation that blockchain provides.

Blockchain makes sense when you need a shared, tamper-proof record among multiple parties who don’t fully trust each other or any central intermediary. But if you’re running an internal company database where trust isn’t an issue, blockchain adds unnecessary complexity and cost.

Think of blockchain as another tool in the technology toolkit, not a universal replacement for everything that came before.

Real-World Applications Beyond Cryptocurrency

Blockchain’s potential reaches far beyond digital coins. Here’s where this technology is already making practical differences across various industries, and where it’s heading next.

Supply Chain Management

Imagine scanning a QR code on your coffee bag and instantly seeing its entire journey: the farm where the beans were grown, when they were harvested, every stop along the shipping route, and when they arrived at your local shop. Blockchain makes this level of transparency possible and tamper-proof.

Companies like Walmart use blockchain to track food products from farm to shelf, enabling rapid identification of contamination sources during food safety scares. Luxury brands employ blockchain to verify authenticity and combat counterfeiting, each product gets a blockchain-verified digital certificate proving it’s genuine.

This transparency benefits everyone: consumers gain confidence in what they’re buying, companies can quickly isolate problems, and suppliers build trust by proving their claims about ethical sourcing or organic practices.

Identity Verification

Your identity, passport, driver’s licence, medical records, educational credentials, currently exists as scattered paper documents and siloed digital records controlled by various governments and institutions. Blockchain offers a better approach: a secure, portable digital identity that you control.

Several countries and organisations are developing blockchain-based identity systems where you maintain ownership of your personal data, selectively sharing verified credentials when needed. Need to prove you’re over 18 without revealing your exact birthdate? Blockchain can enable that. Want to share your medical history with a new doctor without going through bureaucratic hoops? Blockchain-based health records make it possible.

This approach enhances both security (one breach doesn’t expose everything) and convenience (you’re not endlessly re-proving the same information to different organisations).

Smart Contracts and Automated Agreements

Smart contracts are self-executing agreements written in code on a blockchain. They automatically carry out actions when predetermined conditions are met, without requiring intermediaries.

For example, an insurance policy could be coded as a smart contract: if weather data confirms a hurricane hit your area, the contract automatically processes your claim and sends payment, no paperwork, no waiting, no disputes. A rental agreement could automatically transfer access rights and handle payments without a property manager.

Smart contracts reduce costs (fewer middlemen), increase speed (instant execution), and eliminate ambiguity (code executes exactly as written). Ethereum pioneered this functionality, and entire decentralised applications (dApps) now run on smart contract platforms.

Voting Systems

Election security and voter confidence are critical challenges in democracies worldwide. Blockchain offers a potential solution: voting systems where each vote is recorded as a blockchain transaction, making results transparent and tamper-proof while maintaining voter privacy.

Voters could cast ballots remotely with confidence that their vote will be accurately counted and cannot be changed. Election observers could verify the integrity of results without accessing how individuals voted. Several small-scale trials have tested blockchain voting, though widespread adoption faces technical and political hurdles.

Healthcare Records

Medical information is fragmented across different hospitals, clinics, and specialists, making it difficult to access your complete health history when you need it. Blockchain could create a unified, secure system where your health records are stored across a distributed network.

You’d control who accesses your records, doctors could see your complete history instantly (with your permission), and researchers could access anonymised data to advance medical science, all while maintaining robust privacy protections that current systems often lack.

Intellectual Property and Digital Rights

Artists, musicians, and content creators struggle to protect their work and receive fair compensation in the digital age. Blockchain-based systems can timestamp creative works, proving when they were created and who owns them. Smart contracts can automate royalty payments, ensuring creators get paid whenever their work is used.

NFTs (non-fungible tokens), blockchain-based certificates of ownership for digital or physical items, have created new markets for digital art and collectibles, though the space remains controversial and speculative.

These applications demonstrate blockchain’s versatility. The technology excels whenever you need secure, transparent record-keeping across multiple parties who don’t necessarily trust a central authority, which describes more situations than you might initially think.

Conclusion

Blockchain isn’t magic, and it isn’t a solution to every problem. What it is, though, is a genuinely innovative approach to an age-old challenge: how do you create trust and transparency in a system without relying on a central authority?

By now, you should understand that blockchain is essentially a distributed ledger where transactions are grouped into blocks, cryptographically sealed, and chained together in a tamper-proof sequence maintained by thousands of independent nodes. You’ve seen how transactions move through initiation, broadcasting, validation, and final confirmation. You know that security comes from the combination of cryptographic hashing, decentralisation, immutability, and consensus mechanisms that make cheating economically impractical.

You’ve also learned that blockchain isn’t a monolith, public blockchains prioritise openness and censorship resistance, while private blockchains offer controlled environments for enterprise use. Consensus mechanisms like Proof of Work and Proof of Stake each balance security, speed, and energy consumption differently.

Most importantly, you now know blockchain extends far beyond cryptocurrency. From supply chains to healthcare records, from voting systems to smart contracts, this technology is quietly reshaping how organisations handle information and build trust.

Blockchain is still evolving. We’re in the early stages of discovering what’s possible and what’s practical. Not every blockchain project will succeed, and plenty of hype needs tempering with realism. But the core innovation, a secure, transparent, distributed ledger system, solves real problems and creates genuine value.

Your understanding of blockchain puts you ahead of most people still mystified by the term. Whether you’re considering blockchain solutions for your work, exploring cryptocurrency investments, or simply staying informed about technological change, you’re now equipped to engage with the conversation meaningfully. And that’s no small thing in a world where blockchain is increasingly shaping the infrastructure beneath our digital lives.

Frequently Asked Questions

What is blockchain technology in simple terms?

Blockchain is a type of database that organises data into blocks chained together chronologically. Unlike traditional databases, it’s decentralised and distributed across thousands of computers, creating a permanent, tamper-proof record that no single entity controls. This structure creates trust through technology rather than intermediaries.

How does blockchain prevent data from being altered or hacked?

Blockchain uses cryptographic hashing to seal each block with a unique digital fingerprint. Every block contains the previous block’s hash, creating an interconnected chain. Altering any old data changes its hash, breaking the chain and alerting the network. Decentralisation across thousands of nodes makes widespread tampering computationally impossible.

What is the difference between Proof of Work and Proof of Stake?

Proof of Work requires miners to solve complex mathematical puzzles using computational power to validate transactions, consuming significant energy. Proof of Stake selects validators based on how much cryptocurrency they stake as collateral, using up to 99% less energy whilst maintaining security through financial penalties for dishonest behaviour.

Is blockchain only used for cryptocurrency like Bitcoin?

No, blockchain extends far beyond cryptocurrency. It’s used in supply chain tracking, healthcare records management, voting systems, smart contracts, identity verification, and intellectual property protection. Any situation requiring secure, transparent record-keeping across multiple parties without central authority can benefit from blockchain technology.

Can blockchain transactions be traced back to individuals?

Blockchain transactions are pseudonymous, not anonymous. They’re linked to wallet addresses rather than real names, but the entire transaction history is publicly visible and permanent. If your wallet address connects to your identity through an exchange or other means, all associated transactions can potentially be traced.

What are the main limitations of blockchain technology?

Blockchain isn’t suitable for every application. Public blockchains can be slower than traditional databases, Proof of Work consumes substantial energy, and the technology adds complexity and cost. Blockchain works best when decentralisation and transparency are priorities, but centralised databases remain more efficient for trusted, single-authority systems.