Blockchain is a decentralized distributed ledger technology. Its core is to use cryptography and consensus mechanisms to ensure the transparency, security and immutability of transactions. Through a distributed network between nodes, blockchain can effectively prevent single point failures and data tampering, making the entire system more secure and reliable.

In the blockchain, blocks are the basic units of data storage. Each block contains a number of transaction information and is linked to the previous block through cryptographic algorithms to form a chain structure. This chain structure ensures the irreversibility of data, so that any modification will be detected and rejected by all nodes in the network, thereby maintaining the integrity of the data.

An important component of blockchain technology is the consensus mechanism, which ensures that each node in the network agrees on the validity of the transaction. At present, the common consensus mechanisms are Proof of Work and Proof of Stake. Proof of Work requires nodes to perform complex calculations to verify transactions, while Proof of Stake determines the verification rights based on the number of tokens held by the node.

Smart contracts are another highlight of blockchain technology. They are self-executing codes that can automatically execute contract terms under predetermined conditions. The emergence of smart contracts has greatly simplified the execution process of traditional contracts and reduced the possibility of manual intervention and disputes. Application scenarios include finance, supply chain management and the Internet of Things.

In the financial field, the application prospects of blockchain technology are broad. Bitcoin is the first practical application of blockchain. It is a decentralized digital currency that conducts transactions through a peer-to-peer network, avoiding the intermediary links of the traditional financial system. The success of Bitcoin has triggered widespread attention and research on blockchain technology in cross-border payments, securities trading and identity authentication.