Hash Chains

A hash chain is a sequence of hashes where each hash is computed by applying a hash function to the previous one. This creates a chronological dependency that is incredibly difficult to break.

In blockchain, this concept is extended to link blocks together, where each block contains the hash of the preceding block. This chain creates a permanent record where changing any past transaction would require re-computing all subsequent hashes.

It is the mechanism that enforces the immutability of the history of the ledger. For derivatives protocols, this means that the historical record of trades and margin calls is cryptographically sealed.

It provides the audit trail necessary for resolving disputes and ensuring the integrity of the financial system.