What is a blockchain, and what is Web3?

#A ledger no one owns

Start with the simplest picture. A blockchain is a ledger, a running list of who did what: this account sent that account five coins, this one deployed that program. What makes it unusual is not the list, it is who keeps it. Instead of one bank holding the only copy, thousands of computers around the world each hold the same copy and agree, continuously, on what it says. There is no master server to hack, bribe, or switch off, and no one who can edit an entry after the fact.

Agreeing on a single shared history among strangers, with no referee, is the hard problem a blockchain solves. The mechanism that lets them agree on which transactions are valid and in what order is called consensus; modern Ethereum uses proof of stake, where validators put up capital and lose it if they cheat. You do not need the details to use the chain, only the consequence: the record is very hard to falsify, because you would have to out-vote the entire honest network.

#Why it is a chain

Transactions are not added one at a time. They are gathered into blocks, batches that are appended to the ledger every few seconds. The trick that makes the history tamper-evident is in how blocks connect: each block includes a hash, a short fingerprint, of the block before it.

Block 21,000,001
  parentHash:  0x9f8c...   // fingerprint of block 21,000,000
  stateRoot:   0x4a1e...   // a fingerprint of all balances and storage
  transactions: [ ... ]    // what happened in this block
  // change any past transaction and its block's hash changes,
  // which breaks the parentHash of every block after it.

Because each fingerprint depends on the exact contents of the previous block, editing an old transaction changes that block's hash, which no longer matches the parentHash stored in the next block, and so on all the way to the top. To rewrite one line of history you would have to redo every block since, faster than the whole network builds new ones. That is why the past is treated as settled.

#From a ledger to a world computer

Bitcoin's chain is mostly a ledger of payments. Ethereum's is more: it is a shared state machine, a single computer whose memory everyone agrees on. Its state is a giant table of accounts. Some are owned by people, holding a balance. Others are smart contracts, holding both a balance and code. A transaction is an instruction that moves the state from one agreed version to the next, either by sending value or by running a contract's code. Every node runs the same instruction and reaches the same result, which is how they stay in sync.

#So what is Web3?

Web3 is the name for applications built on that shared computer. In the familiar web, an app's data and rules live on a company's servers, and you get an account by signing up. In Web3, the core logic lives in smart contracts on a public chain, and you interact with them using your own account, the one your wallet controls. No one grants it and no one can close it. The promise, and it is only a promise to the extent the code is written well, is that the rules are enforced by that public code rather than by an institution you are asked to trust. The rest of this section is about how that code works, and how it fails.