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A blockchain is a shared database that documents any exchange or movement of information, money, goods, or services, whether between individuals or organizations. Blockchains don’t perform those activities themselves—they’re simply used to record what has taken place.

Although this relatively new technology has so far been primarily limited to financial transactions—such as the buying and selling of virtual currencies like Bitcoin—blockchain has enormous potential in business and government. For example, blockchain could be used in everything from military logistics, to healthcare data, to voting records.

• No single keeper of records: Instead of the database being stored on a central computer, it’s simultaneously stored on the computers of all the users. Any user can make a change to the database at any time—though everyone else can see that change.

• Transparency and trust: Because all users with access to the blockchain can see all the transactions being made, it’s easier for participants in a transaction to trust one another. While some basic information is available for everyone on the blockchain to see—for example, the value of a transaction, or the number of items shipped—more detailed information can be kept private, and made visible only to the participants involved in the transaction. The other aspect of trust that comes into play is that if a transaction appears on the ledger, there is a guarantee that it was the real sender that originated it, not an impostor. This is guaranteed by digital signatures.
  

• Security: The blockchain record is permanent, and data already recorded cannot be altered. For example, if a supplier records in a blockchain that it delivered 100 items to a defense organization, it would not be able to go back into the system the next day and change that to say 200 items were delivered.
  

• Peer-to-peer transactions: Blockchain removes the intermediary in verifying financial or other transactions. For example, people sending digital payments through the Internet can do so without involving a bank. The property of decentralization makes the system fault tolerant in that some nodes can go offline and the system will continue to function. Removing the intermediary may also make transactions faster, cheaper, and more easily automated.