What characterizes blockchain technology?

Blockchain technology is characterized by a decentralized ledger that enhances security and transparency. The fundamental principle of blockchain is its distributed nature, where multiple copies of the ledger exist across a network of computers (nodes). This decentralization means that no single entity has control over the entire blockchain, reducing the risk of fraud and manipulation.

Each transaction or block of data is cryptographically linked to previous blocks, ensuring that once a block is added to the chain, it cannot be altered without the consensus of the network. This characteristic not only secures the data but also promotes transparency, as all participants in the network can access the same information, allowing for greater trust among users.

In contrast, a centralized ledger would imply control by a single entity, compromising both security and transparency, while options describing methods of encryption or verification by a single authority do not capture the essence of blockchain's decentralized nature.