In a nutshell a Blockchain is the product of two components, a block and a link that connects it to one or many other blocks, thus creating the blockchain. In its simplest forms a block contains a record or a number of records, an encrypted (*Hashed*) version of the previous block and a timestamp. A Link (or chain) is just an encryption link from one block to another.
What makes Blockchain different?
The strength behind this technology is that inherently it does not allow for singular modification of data, meaning that should one person modify the contents of a block, without effecting a transaction, then this information is suddenly out of sync with the network and its hash will not match up with its predecessors, and thus will not be accepted by the network. For this to work, the blockchain technology is typically managed by a peer-to-peer system with clear rules on how each node can interact, and the conditions needed for a new node or transaction to be effected. This means that no transaction that has happened in the past can ever be altered, unless the whole network agrees. In practice this means that any information that has been recorded, cannot be hidden from the network or changed in any way, unless the whole network knows about this change. This has led to Blockchain being recognised as a Decentralised system, whereby one person or entity does not have control on the record keeping (government archives, bank records, hospital records, accounting systems etc… all suffer from the flow that they are controlled by a single entity).
Blocks and links forming a blockchain lattice
Who invented Blockchain?
In its simplest form, blockchain was invented by Satoshi Nakamoto in 2008 as a way to keep public records of all transaction handled by the first cryptocurrency, Bitcoin. This was done due to an age-old problem with banking systems, Counterfeiting, and Double Spending. Since the beginning of paper currency, banks have spent billions of Euro trying to make currency impossible to copy, whilst also making online transactions more secure. This is due to the nature that currency and transaction authority is held at the bank, and therefore it is the bank’s duty to verify that each transaction is valid. Blockchain solves this problem by making the network its own validation system. Nowadays, most cryptocurrencies have public ledgers that can be read by any person and checked by third party to make sure that all transactions have been recorded truthfully. This now created a publicly verifiable ledger without the need to trust the authorities book-keeping.
So in essence what we’re looking at here is a very robust record keeping system that has a number of very unique features:
- It is Completely Digital (yay trees)
- It is nearly impossible to change past records
- It is a peer-to-peer system where everyone contributes
- It is publicly reviewable and
- It is decentralised and tailored to the requirements.
Continue Reading about blockchain:
- What is Blockchain?
- Why is Blockchain Important?
- What is a Crypto Currency?
- What is an ICO?
- Are Cryptocurrencies and Tokens the same?
- Can Blockchain be used without a Coin or Token?
- Blockchain in Use (Real Estate)
- Will Blockchain replace banks? (Part 1 – Banking and Finance)
- Will Blockchain replace banks? (Part 2 – Blockchain Adoption)
- What is Distributed Ledger Technology? (Coming Soon)
- What is the future of Blockchain? (Coming Soon)
If you want to learn more about Blockchain Technology, Cryptocurrencies, ICOs, Distributed Ledgers, Smart Contracts or other fields related to the technologies, contact me using the contact page, or leave a comment below.
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