Level 2
How Blockchain Records Transactions
Understanding how data is permanently stored and verified.
7 min read
A blockchain records transactions by grouping them into blocks, linking each block to the previous one with a unique code (hash), creating an unbreakable chain of records.
Why This Matters
Understanding how blockchain stores data helps you grasp why crypto transactions are permanent and why "the blockchain never forgets." This knowledge protects you from expecting transactions to be reversed or edited.
Simple Analogy
Imagine a notebook where each page is numbered and stamped with the exact contents of the previous page. If anyone tried to change page 5, the stamp on page 6 wouldn't match anymore—and neither would pages 7, 8, 9, and so on. Everyone with a copy of the notebook would immediately see the tampering.
How a Transaction Gets Recorded
1
Transaction is created
You send crypto to someone. This creates a transaction request that gets broadcast to the network.
2
Transaction enters the mempool
The transaction waits in a holding area (mempool) with other pending transactions.
3
Validators select transactions
Miners or validators choose transactions to include in the next block, usually prioritizing higher fees.
4
Block is created
Selected transactions are grouped together. The block includes a hash of the previous block, linking them together.
5
Block is verified and added
The network verifies the block is valid. Once added, the transaction is permanently recorded.
đź“Š Block Structure
Each block contains: Block Header (timestamp, previous block hash, nonce) → Transaction Data (all transactions in the block) → Block Hash (unique fingerprint of this block). The hash of block N becomes part of block N+1, creating the chain.
Why Can't Transactions Be Changed?
Each block's hash is calculated from its contents AND the previous block's hash. Changing any transaction would change the block's hash, breaking the link to all following blocks.
To fake a transaction, an attacker would need to recalculate every block after it—and do so faster than the entire network adding new blocks. With thousands of computers maintaining copies, this is practically impossible.
What Beginners Get Wrong
- •Transactions cannot be reversed once confirmed—double-check addresses before sending
- •Even if you made a mistake, no one can "undo" a blockchain transaction
- •Unconfirmed transactions (still in mempool) can sometimes be replaced, but this is not reliable
- •More confirmations = more security, but even 1 confirmation is usually irreversible
Key Takeaways
- Blockchain groups transactions into blocks linked by cryptographic hashes
- Each block references the previous block, creating an unbreakable chain
- Changing one transaction would break all following blocks
- Thousands of copies exist worldwide—tampering is practically impossible
- Once recorded, transactions are permanent and irreversible