In the future we might well consider the emergence of the distributed ledger, along with generative AI, as one of the defining moments of this century and even a turning point in human history.
Of all of the technologies that combine to create the Everything List, the distributed ledger is the most critical. Strangely, unlike other elements such as AI and the internet, it emerged on the scene apparently out of nowhere, fully formed and complete. In 2008, a document written under the pseudonym Satoshi Nakamoto, described in detail a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution, a system he called Bitcoin.
Although the paper focused on how Bitcoin would be issued and managed, it also described a decentralised mechanism that would maintain and record Bitcoin transactions. Although not given a specific name by Satoshi Nakamoto this system has come to be known as the Blockchain for reasons we shall discover later.
The Blockchain
So, what is a blockchain?
A blockchain is a distributed digital list or ledger with some unique capabilities.
Decentralised: No single entity or node controls the network or the data.
Consensus: Blockchain networks use specialised algorithms to ensure that all participants are in agreement about the current state of the ledger.
Immutability: Once data is recorded on a blockchain, it is impossible to alter or delete, ensuring a permanent verifiable record.
Transparency: All participants in a blockchain network have access to the same information, promoting transparency and trust.
Security: Blockchain uses cryptographic techniques to secure transactions and control access to data, making it resistant to tampering and fraud.
Like most scientific advances, the distributed ledger as described in the bitcoin whitepaper incorporated a number of existing systems and processes. The protocols of the internet connected the nodes while established cryptographic methods such as SHA256 secured the system. What was unique to this application was how the ledger approached, and apparently solved, the double spend problem.
Because Satoshi Nakamoto’s intent was to create a decentralised digital currency, the dilemma is presented as a spending issue: if multiple copies of the ledger exist, what prevents a user from spending the same currency from each copy of the ledger?
In more general terms, how do you ensure that multiple copies of the ledger reach an agreement or consensus while also preventing criminals from manipulating the network - all without a central authority overseeing and monitoring the transactions?
The solution was to create a consensus algorithm, a set of rules and protocols that all the nodes follow to reach an agreement. The rule set described in the original bitcoin paper has been termed proof of work (PoW) and since this operation is at the heart of the blockchain, and ultimately the Everything List, it deserves a partial explanation. Before we attempt to describe what is a fairly technical process, we first need to understand a few key elements, the first of which is a hashing function.
A hashing function is a mathematical algorithm that converts data of any size to a fixed-size value, called a hash value or digest. The function most commonly used in the blockchain is the one mentioned earlier in the section, SHA256. Like most functions, understanding the internal workings is not that important. All you need to know is that given any data input the function is capable of converting it into a string of 256 ones and zeros. As an example, if the text “The Everything List” was input to the function it would return the following list of 256 ones and zeros.
1010101101100110101111100010110101011010001110000010010111000100001010110011010111000100110111000110111011101010000110001000101011100010011000010101001110111011101011100010110100000011100111011101011001010011110110110111001110101100100101001101010111001101
This sequence is pretty unwieldy to record and manipulate, so for most situations it is converted into another coding system (hexadecimal) which reduces the length of the string to 64 characters. This string below would be considered to be the hash for the data “The Everything List”:
ab66be2d5a3825c42b35c4dc6eea188ae26153bbae2d039dd653db73ac94d5cd
On the face of it this wouldn’t seem to be a great deal of use, but this simple conversion process sits at the heart of most security systems today because the function has some other interesting properties.
First, keeping everything else the same, a specific input will always deliver the same hash value. Entering the data “The Everything List” will always return the string listed above that begins “ab66be…”
Changing the input even very slightly creates a completely different value for the hash. For instance, the hash for “The everything List” is:
F6d246e04cf162dbd6f4ded64a7cd29e5a1e62320f482653d735c98d33d23232
Lastly, it’s a one-way function, meaning it’s not currently possible to reverse the process and convert the hash back into the original input.
All these features added together mean that hash functions are extremely useful for protecting passwords. When you log into your computer or tablet the password is tested for the correct value. If that value was stored as clear text in a file, discovering it would be fairly simple, but if the password was stored as a hash that doesn’t give any information away. When you login, your password is converted to the hash value and the hashes are compared - if they match, then you are in.
The feature of the hash function used in the blockchain is the one that proves authenticity. Remember, if a block of data is changed in any way, the computed hash is completely different. Therefore, if you take some data, create a hash and then store the hash with the data it can act as a type of electronic seal proving that the data (or the hash) has not been altered.
Now that hashes are out of the way we can return to the blockchain, and specifically why it’s called the blockchain.
Storing and writing individual entries into the ledger and then agreeing that all the entries match would be a highly inefficient and frankly impossible task. The solution to this problem is to gather up pending transactions into a group and then process this as a single unit or block. In the original bitcoin paper, the size of the block was fixed at 1MB, which can contain around 2,000 standard transactions. All of the nodes then play a game that has only one winner - the prize being the right to add a block into the chain. Before we go into the details of the game it’s worth looking at how a block is created.
Once the transactions have been assembled into a fixed format, a hash is created that provides a security seal on that block. The hash is constructed from a number of inputs including the transaction data and the hash of the preceding block in the ledger. As a result, the hash of each block is dependent on the hash of the preceding block, effectively creating a chain of verification that runs all the way down to the first block in the chain. Attempting to falsify any historical block in the chain immediately invalidates every block that succeeds it. The requirement to include the hash of the preceding committed block also serves to keep the nodes honest. They can’t get a head start on working on the next hash before the result of the current game is announced, nor can they build a pool of solved puzzles ready to go. No cheating is allowed in this game.
However, if you can never alter a committed block, how does a value stored in a block ever get updated? Quite simply, it doesn’t - the changes to the value are stored as a new block, meaning that ledger not only stores the current value but a timestamped and verifiable audit trail all the way back to its creation.
And that’s why it’s called a block-chain.
Although we’ve managed to answer one fairly simple question, we have yet to address how the consensus algorithm at the heart of the blockchain actually works. How does a system with no central manager agree to add a new block to the chain?
Although the process has several levels of complexity, the basic idea is fairly simple - all the nodes of the network compete to play a game and the winner has the honour of adding the next block. Perhaps not surprisingly the game is “find the hash” and the process goes something like this.
As we have described, every node is capable of reading transaction requests as they pass across the network and can use the information to assemble a block. Once the block is assembled, it’s passed through the hashing function and the result is analysed. The objective of the game is to create a hash with a value below a specific number. In digital terms this means a hash that has a fixed number of leading zeros.
To give you some idea of what this might look like, our original hash of “The Everything List” would clearly fail but if we could change the input some way to create the hash below we could win the prize.
000000004cf162dbd6f4ded64a7cd29e5a1e62320f482653d735c98d33d23232
As you can see, the trick is to create a hash with a long string of leading zeros. By adjusting the number of leading zeros you can make the task harder or easier to solve. The lowest number of leading zeros ever required to solve the puzzle was eight which represents a 0.00000002% chance of success. The current difficulty level is nineteen or more leading zeros - the odds of which makes winning a national lottery seem like a coin toss.
But what happens if the node runs the block through the hash but fails to come up with the magic number? The node can try again but only after altering the input, as each attempt will result in a completely different hash and may win the prize. Any change to the input will create a new hash but you can’t really alter the transaction data, so a special field is provided in the block called the nonce (number once). The nodes are free to increment this number to change the output of the hash algorithm.
Obviously, the more times you retry the hash, the more likely you are to solve the puzzle, so in general the process favours nodes with massive computational power. However other variations in the block header including a node ID and the fact that running a check is not an intensive process, so it’s theoretically possible to win the game with a single roll of the dice. Once the puzzle is solved, the result is announced across the network and the computation checked and confirmed by other nodes. At this stage it becomes a confirmed block and it’s added to the chain, and the process repeats itself every ten minutes.
Each node stores a complete copy of the blockchain which increases in size as each block is added. As of late 2025 the size of the blockchain is close to 700 GB (gigabytes), which is a large enough file but not excessive when set against the capacity of modern day storage devices. The fact that each node has a complete copy of the list ensures transparency in the system. Anybody with the correct software can query the list and return a history of translations tracing the movement of bitcoin between custodians. The holders are identified as anonymous tokens so no drug barons are harmed by this process but transparency is assured.
As you might expect, the term “proof of work” relates to the fact that it requires a large amount of computational effort and storage to reach a consensus. Popular media normally describes the whole process as bitcoin mining and conjures up the vision of thousands of computers (miners) attempting to solve a fiendishly complex mathematical puzzle. It’s not that the puzzle is hard to solve, it’s just that it has to be attempted many trillions of times to generate a hash with the correct format.
Like all work, this amount of effort requires a huge energy input. The annual global electricity consumption dedicated to maintaining a consensus on the bitcoin blockchain is estimated to be somewhere between 155 to 172 TWh per year, which is comparable to a country the size of Poland. So, the question arises - why would anybody host a computer to take part in a hashing competition only to be handed Poland’s electricity bill at the end of the year?
The answer is that there is a prize awarded to the winner which is more valuable than the satisfaction of taking part - the block reward.
A block reward is compensation awarded to miners for validating blocks of transactions on a blockchain. This reward is typically newly minted cryptocurrency tokens and, in the case of the original blockchain, that cryptocurrency is Bitcoin.
As of January 2026, the current block reward is currently set to 3.125 Bitcoin which at current prices equates to around £216,700. This sounds like good return for ten minutes work but unfortunately the competition to land that prize is extremely high.
Note: For this reason miners normally operate in large groups and then split the prize between all the members based on the proportion of computational effort supplied.
From this explanation you might expect the Everything List to exist as part of the bitcoin blockchain, but that’s not going to be the case. For reasons that we shall explore later that wouldn’t be technically possible or even desirable. The bitcoin blockchain has been used as an example because it exhibits all the classic features of a blockchain and it’s the most widely known and understood example.
Does this mean that there are other blockchains out there?
Yes, I’m afraid so, lots of them in fact.
When the original bitcoin paper was released, it also included the blueprint for creating a blockchain as open source code, which means anybody can use and adopt it for their own purposes, which is exactly what happened. Once the basic concept was understood, it became open season for blockchain development. One of the most significant networks to emerge during this period was Ethereum.
Ethereum is a public blockchain network that has many of the same features of the Bitcoin network. The nodes on the network assemble blocks and these are linked together using a hashing mechanism. It also has its own internal cryptocurrency which in this case is called Ether (ETH) and in the early days, employed Proof of Work as its consensus algorithm.
However, while the bitcoin network was content to manage distributed transactions, the Ethereum network was designed to support both distributed data and computing. The idea was that, alongside transaction data, users could store fragments of computer code termed smart contracts that would automatically execute when certain conditions are met, eliminating the need for intermediaries like lawyers or banks. As an example, a smart contract could automate the exchange of property rights and funds upon completion of a sale and because the contract is held on a blockchain, all participants can see the terms and conditions which cannot be altered once agreed.
The second major difference between the two systems is the way the consensus algorithm works. Originally the Ethereum network used a slightly modified version of proof of work but this quickly ran into issues. As we have discovered, PoW is very energy intensive which makes the network expensive, while the blocksize and the time it takes to solve the hash puzzle places a hard limit on the speed and volume of transaction processing. Ethereum was designed for mass adoption which requires low transaction fees - the two approaches didn’t match up. A new consensus algorithm was needed.
Note: The original bitcoin blockchain PoW design has been adjusted over time to improve performance. Blocks now have a theoretical limit of four megabytes and a more realistic limit of two megabytes. In addition, a higher level protocol called Lightning has been added at the payment level that allows transactions to be processed off-chain, making them faster and cheaper.
The new consensus algorithm is called Proof of Stake (PoS) and it was first adopted by the Ethereum network in 2022. As the name suggests, a node that wishes to take part in the validation process must ‘stake’ some funds denominated in ether (ETH) as a type of bail insurance to ensure they don’t break the rules. A minimum of 32 ETH (~£77,500.) is required to become a validator and participate directly in network consensus. The funds are locked into a smart contract which ensures that if a validator accepts a bad block or misbehaves in any way, a portion of their staked funds will be “slashed” as a penalty.
The principal impact of adopting the PoS consensus algorithm is a massively reduced energy requirement. Using the universally recognised standard of comparing annual energy requirements to a nation state, the Ethereum network is equivalent to the power consumption of Gibraltar at around 0.01 TWh. Other advantages include increased speed and responsiveness. Although an Ethereum block is much smaller (~100K), a new block is added every 12 seconds on average which equates to around 5MB of committed data over a 10 min period.
All this seems pretty clever and an improvement over the bitcoin blockchain, but what does it actually do?
The answer is you can use the network to build or host any task that makes use of data (transactions) and logic (smart contracts). Essentially, Ethereum allows developers to create and deploy distributed applications (dApps), programs that operate on a decentralised network without relying on intermediaries or central authorities. Since Ethereum is a public platform which anyone can use to develop and build applications, it’s employed in a variety of ways including decentralised finance (DeFi), trading non-fungible tokens (NFTs) and supporting social media platforms. It’s also a popular platform for hosting large scale on-line computer games. If you have ever played Decentraland or Hytopia, both run on the Ethereum network.
From here the discussion of blockchains starts to accelerate and expand into every area of online activity.
The Solana blockchain is a rival technology to Ethereum with its own token, SOL. Launched in 2017, Solana can process over 2,600 transactions per second (TPS) while Ethereum currently handles around 15 TPS. This speed advantage allows Solana to currently offer lower fees and better scalability and it is a popular platform for dApp development.
Cardano is another example of a public PoS blockchain platform. It was founded around the same time as Solana by Ethereum’s co-founder Charles Hoskinson to provide a secure and sustainable decentralised platform using the ADA token. Cardano’s Ouroboros proof-of-stake consensus mechanism needs far less energy to process network transactions, reducing the analogy to a large house rather than a small country.
While both Solana and Cardano are examples of general public access blockchains, other parties have created blockchains that cater for specific market areas.
Probably the best known of these is the XRP Ledger also known as the Ripple Network, a decentralised public blockchain built specifically for business. The goal of Ripple is to serve as an intermediate mechanism of exchange between two currencies or networks using its own internal cryptocurrency, XRP. Ripple is different from other platforms in that it is owned by a single company and not by a decentralised community.
The point of this discussion is not to describe every single blockchain operating today. That would take quite a while since estimates suggest that the number of operational blockchains is at least one thousand and rising. Not all blockchains are large public offerings like the ones described above. Some are private, only accessible to a specific company or group, others a mixture of the two.
The important point is not how these blockchains work or operate but the fact that the distributed ledger exists and is being used extensively to underpin the management of information. The Everything List will be built using a form of distributed ledger technology, perhaps using some of the blockchains mentioned above, perhaps none of them, it doesn’t really matter.
In the future, artificial intelligence will filter and categorise the mountains of information collected by IoT and distill its essence into countless numbers of distributed ledgers, all working on a tokenised system. Like individual websites on the internet, these ledgers will exist as isolated islands of data until they are linked together to create a whole. In the case of the internet, the linking requires the universal acceptance of standards such as DNS and protocols such as HTTPS and SMTP. Since the internet provides the model for the Everything List it will doubtless follow the same approach.
Standards and Protocols
We have seen that within a blockchain network, various standards and protocols are used to ensure a level of functionality, security, and interoperability. These include consensus protocols such as Proof of Work (PoW), networking protocols such as Gossip, which is used to connect nodes, and the SHA-256 cryptographic standard.
However, for the Everything List to operate effectively there has to be some element of standardisation between blockchains to allow them to exchange information in an efficient manner. In an ideal world these standards would be developed and agreed by an international committee such as the Institute of Electrical and Electronics Engineers (IEEE) and indeed such an initiative does exist.
The IEEE Standard for Blockchain Interoperability Data Authentication and Communication Protocol (IEEE 3205) was approved in 2023 and establishes common interfaces and protocols to enable secure and seamless exchange of assets, data, and smart contract messages across diverse blockchain networks. However, by the organisation’s own admission;
“the standard only serves as a technical framework and its adoption and real-world implementation experiences are yet to be fully realised”
which is another way of saying that nobody is following the standard.
If the development of the internet serves as an example, interoperability standards will emerge through practical use and commercial advantage rather than committee. Currently there are a number of generally agreed standards for creating and managing tokens on blockchain networks. These include:
ERC-20 A general standard for creating fungible tokens on Ethereum
ERC-721 A standard for non-fungible tokens (NFTs) on Ethereum, representing unique digital assets
ERC-1155 A multi-token standard that allows both fungible and non-fungible tokens in one contract
BEP-2 BEP-20 Token standards for the Binance Chain and Binance Smart Chain, respectively
However, these standards are still blockchain vendor dependent. Converting between ERC-20 and BEP-2 requires the services of an external organisation such as IOHK. It’s likely that, in the short term, interconnections between blockchains will require third party services until the technology matures and settles on a standard.
There are a number of candidates for the crown including Inter-Blockchain Communication (IBC), a protocol that draws inspiration from TCP/IP, the communication protocol at the heart of the internet and Polkadot. The last example introduces the concept of a parachain, a type of independent blockchain that is connected to larger blockchain networks to allow them to communicate seamlessly.
In many respects, individual blockchains are like walled enclosures. But for the Everything List to function, blockchains need to communicate not only with your digital guards but also with the world outside the prison walls.
For that, you need a new service altogether - an oracle.