What is the Blockchain?

BitExplorer

Blockchain #technology is changing industries around the world. It’s bringing #organizations, governments, financial #institutions, and payment platforms into a new digital age. It’s r#evolutionizing everything around us – and yet many #people have no idea what blockchain is or how blockchain #technology works.

Today, we’re #explaining the core things you need to know about blockchain and #blockchain technology.

What Is #Blockchain?

#Blockchain is an open, distributed ledger that can efficiently record #transactions between two parties in a verifiable, #permanent way. #Blockchain is the #technology at the heart of bitcoin and other #cryptocurrencies. Without #blockchain, cryptocurrencies would not exist in their #modern form.

Why Is #Blockchain Technology So Important?

Contracts, #transactions, and the records of them have long played a crucial role in our modern #world. Our legal and #political systems rely on contracts and transactions for virtually every core #function.

Contracts, #transactions, and records are used to protect assets or set #organizational #boundaries. They’re used to #verify identities or chronicle events.

Every day, the #world around us is governed by contracts and #transactions. However, the way in which we record these #contracts and transactions is stuck in the past. Those #critical tools haven´t kept up with the digital #revolution.

As one #article in the Harvard Business Review explained, “They’re like a rush-hour #gridlock trapping a Formula 1 #race car.” That article goes on to explain that, “In a digital #world, the way we regulate and maintain a#dministrative control has to change.”

That’s why so many #companies are seeking to implement blockchain #technology into various industries – the potential #benefits are enormous.

Blockchain Could #Eliminate The Need For #Lawyers, #Brokers, & #Bankers


Think of the importance of #blockchain like this: much of the world’s #infrastructure consists of #intermediaries – or #middlemen.

We’re not just talking about #middlemen like #businesses that take a cut of profit for selling goods or #services.

We’re talking about #lawyers who act as an #intermediary between the public and the law, or #bankers who act as an intermediary between individuals and their access to #creditors. There’s a possibility that #lawyers, #brokers, and #bankers could be made obsolete by #blockchain technology in the future.

Instead of requiring #intermediaries, blockchain technology would allow #individuals, #organizations, machines, and #algorithms to interact #freely with one another.

We’re already seeing this with #blockchain and bitcoin. When two individuals want to exchange #bitcoin or other #cryptocurrencies, they don’t go to a bank and pay a hefty transaction fee. They complete a #peer-to-peer transaction over the #blockchain.

 

How Does #Blockchain Work?

The #blockchain is a distributed ledger that embeds contracts and transactions in digital #code.

This #digital code – and the record of these transactions – is stored in a transparent, shared #database. This database is #decentralized, which means it’s held by people (“nodes”) all over the w#orld. This decentralized system protects the #blockchain from tampering, deletion, and revision.

Using the #blockchain, everything we do has a #digitalrecord. That means every #process, transaction, task, and payment has a #digital #record. Each record can also be traced back to an #individual: it has a signature that can be #identified, validated, stored, and shared.

Ultimately, this allows #organizations or individuals to conduct business in a more #efficient way: with blockchain, we have a #tamper-proof, verifiable, and permanent way to record #transactions between two parties.

Could #Blockchain Fail To Revolutionize The World?

There’s #enormous hype in the world of blockchain right now. Blockchain #startups are springing up every day. Many are comparing it to the #internet revolution in the early 90s, when #companies rushed to take advantage of the #power of this dramatic new invention.

However, some – like the #HBR.org article mentioned above – cast doubt on the ability of #blockchain to revolutionize the #world. It’s far from a certain thing.

Some point to security issues outside of the #blockchain – like the #infamous 2014 #Mt.Gox hack, when users lost $450 million #USD worth of bitcoin.

Others point to the #history of technological innovations. With most major #technology changes, there needed to be a #substantial technological, governmental, organizational, and #societal change to pave the way for that #technology.

With a change as #substantial as blockchain technology, countless modern #institutions would need to fall before #blockchain could fully be implemented.

As the Harvard #Business Review explains, “It would be a mistake to rush #headlong into #blockchain #innovation without understanding how it is likely to take hold.”

The #Technology Behind Blockchain

As mentioned above, #blockchain is a distributed, digital ledger. It’s a #peer-to-peer network that lies over top of the internet.

#Decentralization

One of the key #features of this technology is that it’s a distributed database. It’s #decentralized. The database exists in #multiple copies across multiple computers. Each of these #copies is identical. The computers – or #nodes – all form a peer-to-per network, which means there’s no #centralized database or server.

 

 

Today, #organizations maintain centralized databases and servers where all their #data is held. This makes these #servers a lucrative target for hackers. #Blockchain decentralizes data and makes it public but #encrypted. Many people believe this makes it #tamper-proof.

When a #transaction occurs on the blockchain, data about that new# transaction must be sent to all #computers – nodes – on the network. This means that the blockchain stays in syncronization as one “world-wide-ledger”. Instead of having multiple conflicting #ledgers, there’s a single version of “the #truth”.

Digital #Signatures

Another #key feature of blockchain is that each transaction on the #blockchain is signed digitally, using public key #cryptography. #Public key #cryptography involves the use of two keys – a #public and #private #key. The public key is used to sign and encrypt the sent message, and #anyone can see this key.

However, only the #recipient has the private key, which means only the recipient can decrypt the #transaction. Public #keys are used for more than just encrypting messages: they’re also used to authenticate an #identity.

Blocks Of #Transactions

The reason it’s called a #blockchain is because it’s literally a chain of blocks.

Each block in the #blockchain consists of a list of transactions. Each block also contains a block header. Headers contain three sets of #metadata, including structured data about the #transactions in the block; a timestamp and #proof-of-work algorithm data; and a reference to the parent block, or #previous block, using a hash.

Using these three sets of #metadata, each block is chained together – hence the word blockchain.

Mining

You may have heard of #bitcoin mining. It’s significantly different from traditional #mining, to say the least!

#Mining is the process by which new blocks are created on the blockchain. In #Bitcoin, a new block is mined every 10 minutes. Some #cryptocurrencies have a faster block transaction time, while others have a slower time. #Essentially, this means that a Bitcoin transaction takes a maximum of 10 #minutes to process.

Mining #validates each new #transaction on the blockchain. In order to do that, the #miner (which is a #computer or processor) solves a unique, difficult math puzzle. These puzzles require #enormous #computational power.

Since #Bitcoin was first introduced, the difficulty of these puzzles has #increased exponentially, which means more power than ever is needed to solve the #puzzles.

To put the #computational power into perspective, miners were tracked trying 450 thousand #trillion solutions per second to solve the #puzzles – and that was all the way back in #October 2015 as reported by The Economist.

Why would someone spend all this #computational power on math puzzles? It’s because they get #rewarded with bitcoin – or other #cryptocurrencies, if you’re mining other cryptocurrencies. #Miners receive a set amount of #cryptocurrency for every block that is mined, along with a cut of the #transaction fees for all #transactions in the block.

 

A Brief #History Of #Blockchain #Technology

You could write #thousands of pages on the history of blockchain #technology, including all of the minor #improvements, major leaps, and companies formed over the past #decade. Instead of boring you with that #information, we’ll give you a brief history of how blockchain #technology came to be what it is today:

The first mention of #blockchain can be found in the original source code for #Bitcoin. You can view the original code for #bitcoin on Github.

#Bitcoin was the world’s first major virtual currency. It was the first time we saw the #impact of blockchain #technology on the world around us. The currency was officially introduced in #October 2008 when a mysterious #figure named Satoshi Nakamoto wrote a paper called, “Bitcoin: A #Peer-to-Peer #Electronic #Cash System”.

In Jan. 2009, the BTS´s code was released onto the internet as opensource. #Satoshi #Nakamoto – whoever that #person is – “mined” the first bitcoins and officially launched the #world’s largest cryptocurrency.

Soon after, in April 2011, #Satoshi disappeared from the internet and stopped contributing to #bitcoin forums, papers, or code. Despite numerous #attempts to discover who Satoshi #Nakamoto is, and even a few cases of #misidentification, we know nothing about Satoshi to this day (we’ll talk more about the# identity of #Nakamoto below).

2013 marked the first #year when people really started to hear about bitcoin. #Investors surged into bitcoin and blockchain-related #startups. The price of bitcoin hit a high of $1108 in #November 2013 (a high that has since been #surpassed).

Over the #years since, other cryptocurrencies have been created. These coins are called “#altcoins” – or alternative #bitcoins – because they’re cryptocurrencies that aren’t bitcoins. #Litecoin and #Dogecoin were two of the first to appear, for #example. Today, #Ethereum holds a solid position as the #number two #spot behind bitcoin.

Major #Innovations In #Blockchain #Technology Over the Years

There have been a number of #innovations over the history of blockchain. Without these #innovations, blockchain #technology wouldn’t be nearly as useful as it is today. Those #innovations include all of the following:

Bitcoin:

By #nature, this is the first and most #obvious blockchain #innovation.

Blockchain:

The second #innovation is when people realized that the underlying technology behind #bitcoin – the #blockchain – could be used for more than just bitcoin.

#People realized it could be used for other cryptocurrencies, for example, or for a wide #range of other #industries and purposes. This is where the history of blockchain technology and #innovation really took off.

Ethereum & The #Smart #Contract:

ethereum

 

 

 

 

The second #major blockchain platform after Bitcoin was the #Ethereum #blockchain. The primary advantage of the #Ethereum blockchain over previous blockchains was the smart #contract system.

Essentially, this involved building small #computer programs directly in the #blockchain. This allowed conventional #financial tools – like loans or bonds – to be represented on the #blockchain, instead of just bitcoins and #cryptocurrencies.

Proof Of Stake:

#Proof of #stake started appearing in late 2016 and early 2017. Today, most #blockchains are secured by #Proof of #Work, which means the group with the largest computing power makes the #decisions (i.e., the #miners with the biggest share).

New #blockchain technology replaces this with proof of stake. This is a key #security #innovation because it removes one of the only #security flaws in traditional blockchains – the fact that #miners with a 51% share of processing power could take #control of bitcoin or other #cryptocurrencies.

Scaling:

Scaled #blockchain #technology will accelerate blockchain processing in the future. Today, #blockchain #technology requires every computer in the network to process every transaction. This is #slow and inefficient.

Scaled #blockchain #technology will accelerate the process by determining the precise #number of #computers needed to process each transaction, and then utilizing other computers for other #tasks.

Ultimately, the #history of bitcoin is a history of the world’s elite computer scientists pushing #computer and internet #technology past their known limits. And all of this innovation can be traced back to #Satoshi Nakamoto.

 

Who Invented #Blockchain? Who Is #Satoshi Nakamoto?

Bildergebnis für satoshi nakamoto

 

Blockchain #technology was first introduced in a paper, written by Satoshi #Nakamoto, entitled, “Bitcoin: A Peer-to-Peer #Electronic Cash System”. In that paper, Satoshi describes the #basis for blockchain technology. All #blockchain innovations can be traced back to Satoshi Nakamoto. He’s the #inventor of blockchain and #bitcoin.

Who is #Satoshi Nakamoto? Nobody really knows. “He” could be a single #Japanese man. Or he could be a group of #individuals. Satoshi disappeared from bitcoin and blockchain #development in April 2011, although he hadn’t contributed to #bitcoin’s development since #December 2010.

Here are some of the things we #know – or #think we know – about the #mysterious #creator of blockchain:

  • When #bitcoin was first #introduced, Nakamoto claimed to be a #Japanese man who was born on April 5, 1975.
  • However, many #people believe the use of a traditional Japanese name was a d#ecoy; most research into the identity of #atoshi has focused on cryptography experts and computer #science specialists living outside of #Japan – mostly in the USA and #Europe.
  • Why do people believe #Nakamoto isn’t Japanese? One big reason is because he wrote with perfect English in all online #communications; many people also believe he is British or #Australian because of his use of #British #English idioms like “bloody hard” in forum posts.
  • Another clue to the #identity of Nakamoto is his timestamps: Swiss coder Stefan #Thomas analyzed all of #Nakamoto’s bitcoin forum posts and found that he consistently didn’t post during certain hours of the day; based on this #information, it was believed that Nakamoto lived in the #Eastern Time Zone or #Central #Time #Zone, which could narrow his location down to North #America or parts of Central and South #America (assuming Nakamoto is a single person with a normal sleep #schedule).
  • The first “#breakthrough” into the identity of Satoshi #Nakamoto occurred in 2015, when parallel #investigations by Wired and Gizmodo revealed that #Australian programmer Craig Steven #Wright could be the #inventor of bitcoin; in May 2016, Wright told the BBC that he was Satoshi #Nakamoto; Wright, however, has offered no #proof, and many people believe Wright was simply #scamming the world or seeking #attention. Others, however, firmly believe Wright is Satoshi.
  • Other #individuals that have been suspected to be Satoshi Nakamoto include Nick #Szabo, a “reclusive #American man of H#ungarian descent” and a brilliant coder; Dorian #Nakamoto, a Japanese man living in #California whose birth name is Satoshi Nakamoto; and Hal #Finney, the first person other than Satoshi to work on the #bitcoin software. Interestingly, Hal #Finney is a next door neighbor of Dorian Nakamoto in #California. Some suspect he #ghost-wrote his #neighbor’s forum #posts, while others #suspect he used his #neighbor’s identity to throw off #pursuers.
  • Today, some people even believe #bitcoin is one big government conspiracy, and that #Satoshi #Nakamoto is a government agency.
  • Whoever he is, it’s estimated that #Satoshi Nakamoto owns approximately 1 million #Bitcoins, making him #valued at over $2.5 billion #USD as of May 24, 2017.

 

Ultimately, the #inventor of blockchain technology may never be known. Or, it could be one of the #names listed above. Until the #mystery is solved, it will play an increasingly interesting role in the #myth behind bitcoin. In any case, #Satoshi is undoubtedly the world’s most #anonymous #billionaire.

 

Where Is #Blockchain Going Next?

We’re only beginning to see the potential of #blockchain technology. #Innovations in #blockchain have made it increasingly #attractive – and usable – to organizations outside the #cryptocurrency world.

Financial #institutions, political organizations, cloud storage #providers, and even online casinos have all started using #blockchain technology. We don’t know where blockchain #technology is going next, but we can’t wait to see.

 

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