Transactions and the records of them are among the defining fabrics in our economic, legal, & political ecosystems - And hence it has always been utmost important to protect their integrity. The intermediaries like lawyers, brokers, bankers have been; since centuries; acting as watchmen of this integrity so that we; as individuals, organizations, machines, or algorithms; could transact/interact with one another without worrying about the maintenance of legitimacy of the data.
One of the most common problems or attacks that any currency system; digital or physical; faces is 'Double Spending' in which the same currency is duplicated/falsified and is spent more than once.
Came 2008 and Satoshi Nakamoto invented Blockchain for use in the Cryptocurrency Bitcoin as its public transaction ledger. The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem without the need of a trusted authority or central server.
So, what is Blockchain?
One of the most common problems or attacks that any currency system; digital or physical; faces is 'Double Spending' in which the same currency is duplicated/falsified and is spent more than once.
'Watchmen' movie
Came 2008 and Satoshi Nakamoto invented Blockchain for use in the Cryptocurrency Bitcoin as its public transaction ledger. The invention of the blockchain for bitcoin made it the first digital currency to solve the double spending problem without the need of a trusted authority or central server.
So, what is Blockchain?
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Blockchain; originally called Block Chain; is a continuously growing list of records, called Blocks, which are linked and secured using cryptography. Each block typically contains a Cryptographic Hash of the previous block, a Timestamp, and the Transaction data.
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Blockchain is a Decentralized database.
To understand the difference between centralized vs decentralized DB, imagine you have two pearls and you want to give one pearl to your friend 'Chi'. In a centralized world, you would have to ask permission from Chi's friend 'Aum'. First Aum will have to vet if you have the pearl or not and if you do, Aum will give you permission to give it to Chi. Aum is same as a bank. But with a decentralized system, you do not have to ask permission from Aum - Instead, the Blockchain will confirm if you have the pearl or not and will proceed with the handover.
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Blockchain assassinates the need of trusting humans/organizations and establishes algorithms (mathematics & computing) as your new trusted-partners (who are highly unlikely prone to errors, malfunctions, & tempering).
With blockchain, we can imagine a world in which data is embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, revision - which ensures that every digital record and signature can be identified, validated, stored, shared.
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Blockchain is a Distributed Database.
Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.
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Blockchain is a Peer-to-Peer Transmission which means that Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.
Blockchain is a Peer-to-Peer Transmission which means that Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.
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Blockchain supports Transparency with Pseudonymity
Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a Blockchain has a unique 30+ character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.
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Blockchain ensures Irreversibility of Records - Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Blockchain ensures that the recording on the database is permanent, chronologically ordered, and available to all others on the network.
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The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.
Sources:
Youtube.com/watch?v=_160oMzblY8
Hackernoon.com/the-ultimate-guide-to-understanding-blockchain-and-cryptocurrencies-f37cf4c0043
En.wikipedia.org/wiki/Blockchain
Hbr.org/2017/01/the-truth-about-blockchain
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