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Blockchain

· 4 min read

Blockchain is a peer-to-peer ledger system that allows peers to transact directly with each other eliminating the need for a central authority.

At its core, blockchain is a system for recording information about a transaction in a new decentralized way that makes it difficult or impossible to alter. These transactions are stored on sheets or blocks in a digital ledger that is shared among the participants of the network. Consensus on the transactions brings the peer-to-peer network into an agreement. Once the agreed-upon transaction blocks are recorded in the immutable ledger, trust becomes a fundamental component built into the system.

Blockchain​

is a combination of several other underlying technologies that have never been combined so successfully. Here are some features that make this new technology so revolutionary.

A ledger​

is a collection of transactions. It is not a collection of assets. Assets are part of a transaction, but the ledger records the transaction. With a digitally distributed ledger or a blockchain, no one owns the ledger. The ledger is distributed among participants in the network, all running the same blockchain protocols. It is decentralized in that an identical copy of the ledger exists on every node/computer on the network. In 2008 with the publishing of Satoshi Nakamoto’s whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”, Bitcoin became the first application to leverage blockchain technology by recording the first asset transfer on a public blockchain ledger.

features that make blockchain revolutionary.​

  • Bitcoin is transacted over the Bitcoin network, which is an open, public blockchain network. If you have an Internet connection and a Bitcoin wallet application, you can receive and send the cryptocurrency Bitcoin. Cryptocurrencies like Bitcoin have value because it can be proven with math. Unlike banks offering centralized services, you are responsible for your cryptocurrency.

  • The ledger is stored, updated, and maintained by a peer network. Nodes form the infrastructure of a blockchain network. They store, spread and preserve the blockchain data, so a blockchain exists on nodes. All nodes on a network follow the same rules of operation or protocols, but nodes have different roles. A full node contains a copy of the blockchain protocol and transaction history of the blockchain and aids in the maintenance of the blockchain. The user node interacts with the ledger. With blockchain technology, a lack of centralized authority is replaced with a peer-to-peer network.

  • Blockchain networks can be public or private. A public blockchain is open to anyone with an internet connection and the appropriate application. A private blockchain grants access and rights to its users before they can interact.

  • Blockchain ledgers are different from centralized ledgers because network participants have an agreement upon what is in the identical ledger. For the blocks to be added, all the nodes in the system come to agree as to what transactions are accurate and should be added to the chain of blocks. Since there is no central authority telling the nodes which transactions are valid, a new way to reach an agreement or come to a consensus is needed.

  • How each blockchain comes to a consensus is built into the protocol, they are the rules built into the code that determines how the nodes will add ledger transactions. The Bitcoin network uses a proof-of-work consensus model. This process of building agreement among a group of mutually distrusting participants is a benefit of blockchain consensus.

  • Cryptography and blockchain offer a secure way to prove something is authentic. Instead of relying on third-party, trust is put into cryptographic algorithms that prove the provenance and authenticity of an attestation.

  • Cryptography also plays a part in another powerful feature of blockchain technology, immutability. What makes blockchain incredibly powerful is that all the blocks are linked together. With the use of a cryptographic technique called hashing, the linked information is forged so that if you go back and try to change any data on any block anywhere in the shared ledger, the link with the other copies is broken in a very obvious and easy-to-determine way. With blockchain, there is no possibility of changing the data or altering the data inside the blockchain, it is permanent.

while traditional database, a system administrator oversees the ledger and can make changes.