What is Blockchain?

Share

A blockchain is a distributed and a decentralized digital ledger that can be used to record transactions and other data across numerous computers in a peer-to-peer network. It can also be defined as a distributed encrypted database like a spreadsheet that is duplicated thousands of times across a network of computers. This network is designed to regularly update this spreadsheet. It is a subset of distributed ledger technologies.

Blockchain comprises a chronological chain of blocks. A block refers to a set of transactions that are bundled together and appended to the blockchain. In the Bitcoin blockchain, the miner nodes bundle unconfirmed and valid transactions into a block. Each block contains a given number of transactions. In the Bitcoin network, every miner must solve a cryptographic puzzle to propose the next block. This process is known as ‘proof of work’ that requires significant computing power.

Timestamping is an important feature of blockchain technology. Each block is timestamped, with each new block referring to the previous block using the cryptographic hash. Combined with cryptographic hashes, this timestamped chain of blocks provides an immutable record of all transactions in the blockchain.

A block in the blockchain primarily consists of four pieces of metadata:

  • The reference to the previous block
  • The proof of work, also known as a nonce
  • The timestamp
  • The Merkle tree root for the transactions included in the block.
Share

A Short History of Blockchain

Share

Blockchain has been the most hyped technology in the last few years. A recent World Economic Forum report predicts that by 2025, 10% of GDP will be generated by blockchain. Though blockchain technology is being overhyped somewhat, it has the potential to disrupt many existing industries. 

Some startups, MNCs, governments, non-profit organizations, and even individuals have already developed and implemented blockchain-based applications. Therefore, everyone should take notice of this trend. However, there’s still a lack of understanding about what it is.

To begin with, the first blockchain was invented by  Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.  That year, he (or she) posted a paper called Bitcoin – A Peer to Peer Electronic Cash System to a mailing list discussion on cryptography. However, Satoshi Nakamoto real identity remains a mystery to this day.  In fact, Satoshi Nakamoto may not be a particular person, but a group of people.

On the other hand, some people argued that Satoshi Nakamoto might not be the first person that created the blockchain technology. The idea behind blockchain technology could be traced back to 1991 when Stuart Haber and W. Scott Stornetta (Scott-Briggs, 2018) conceived the idea on a cryptographically secured chain of blocks. In 1992, they incorporated Merkle trees into the design allowing several documents to be collected into a block.

In addition, there were also previous attempts at creating online currencies with ledgers secured by encryption, among them were B-Money and Bit Gold. B-money was an early proposal created by Wei Dai for an “anonymous, distributed electronic cash system.  His essay was published on the cypherpunks mailing-list in November 1998.  Even Satoshi Nakamoto referenced B-Money when he invented bitcoin. Another precursor of bitcoin is bit gold, invented by Nick Szabo in 1998.  Bit Gold is a decentralized digital currency but was never implemented.

However, the blockchain technology did not gain traction until the emergence of bitcoin. Since its debut in 2008, the bitcoin price has skyrocketed. Many people are actively involved in mining activities to get rich quick. From 2011 onwards, may alternative cryptocurrencies have emerged, among them were Namecoin and Litecoin. Currently, there are over 1,000 cryptocurrencies in circulation with new ones frequently appearing.

None of the cryptocurrencies came close to challenging Bitcoin until the invention of Ethereum by Vitalik Buterin in 2013. The Ethereum platform introduced the concept of smart contracts and cryptocurrency Ether. It is also a platform for ICO, crypto crowdfunding.

According to Ethereum’s official documentation,

“Ethereum is an open blockchain platform that lets anyone build and use decentralized applications that run on blockchain technology”.

Simply put, Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. It allows users to develop decentralized applications(dapps).

Bitcoin and Ethereum are similar in the sense that both employ blockchain technology, a subset of distributed ledger technology. However, Ethereum is a programmable blockchain. Rather than give users a set of pre-defined operations like bitcoin, Ethereum allows users to create their own operations of any complexity they wish. 

References

Who Invented Blockchain Technology?

Who Invented Blockchain Technology?

WEI DAI/SATOSHI NAKAMOTO 2009 BITCOIN EMAILS

Share

Definitions of BlockChain

Share
  • “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” —–   Don & Alex Tapscott, authors Blockchain Revolution (2016)
  • Distributed encrypted database
  • The blockchain is a distributed database like a spreadsheet that is duplicated thousands of times across a network of computers. This network is designed to regularly update this spreadsheet.
  • Blockchain as Google Docs- shared documents
  • blockchain is a continuously growing ledger of facts, replicated across a peer-to-peer network. Facts can range from monetary transactions to content signatures. A blockchain is a distributed and a decentralized digital ledger that can be used to record transactions across numerous computers. This means that the record cannot be retroactively altered without the alteration of all subsequent blocks and the collusion of the network. Each block in the BlockChain contains a hash pointer as a link or reference to a previous block, transaction data, and a timestamp. Blockchains are resistant to modification of the data. A Blockchain serves as an open and distributed ledger that can record transactions between different two parties a verifiable and permanent way.
  • A Blockchain database consists of two kinds of records: blocks and transactions. Blocks hold batches of valid transactions that are hashed and encoded into a hash tree (a hash tree is a tree in which every leaf node is labeled with a data block, and every non-leaf node is labeled with the cryptographic hash of the labels of its child nodes). Each block includes the hash of the previous block in the Blockchain, linking the two.
Share

Blockchain References

Share

 

Share