What is Blockchain Technology?

• Cryptocurrency
  • a medium of exchange; a digital asset.
  • its created & stored electronically in the blockchain, using encryption techniques to control the creation of monetary units and to verify the transfer of funds. (Bitcoin is the most widely know example.)

Cryptocurrency has no intrinsic value (meaning not redeemable for another commodity, such as gold). It has no physical form (and exists only in the network).

Cryptocurrency is DECENTRALIZED. It’s supply is not determined by a central bank; the network is completely decentralized.

Blockchain–a distributed ledger technology; a database that is shared, replicated and in-sync.

Blockchain–a blockchain is a decentralized ledger of all transactions across a peer-to-peer network. By using blockchain technology, participants can confirm transactions without a need for a central clearing authority.

Potential uses can include fund transfers, settling trades, voting and many other applications. (I.e.—fractional ownership in autonomous cars, healthcare—patients’ encrypted health info could be shared with multiple providers without the risk of privacy breaches).

• Pros
  • Increased transparency
  • Accurate tracking
  • Permanent ledger
  • Cost reduction
• Cons/Unknowns
  • Complex technology
  • Regulatory implications
  • Implementation challenges
  • Competing platforms

Blockchain is a type of next-generation business process improvement software.

Blockchain can lower the cost of trust.

BItcoin Whitepaper—published in 2008 by Satoshi Nakamoto. The Bitcoin Whitepaper proposed a solution to the double-spending problem. It proposed a system of electronic transactions without relying on trust. A electronic peer-2-peer payment system base on cryptographic proof instead of trust, allowing any 2 willing parties to transact directly with each other without the need for a trusted 3rd party.

• Fundamental Characteristics of the distributed ledger include:
  • Operation with peer-to-peer networks
  • Decentralized transaction record keeping
  • Consensus or trust-based transactions
  • Tamper resistance

A ‘blockchain’ is similar to a database, but blockchains are NOT used for general data storage, but rather hold information about transactions. Sometimes the blockchain will contain the transactions themselves, or may include the proof a transaction is valid.

• Blockchain Elements
  • Peer-2-Peer Network
  • Cryptography
  • Consensus Algorithms
  • Punishment & Reward
  • Market adoption

Bitcoin is the most popular e-currency.

Ethereum is a DIY blockchain platform.

BLOCKCHAIN PARTS

• Blockchains contain 3 core parts:
  • Block—a list of recorded transactions over a period of time. Transactions can represent virtually any type of activity from registering a land deed to a single purchase. Any rules relating to the block itself are established when the network is created. (For example, the maximum number of transactions in a block, or the size of each block, can be limited.)
  • Chain—When the block reaches it’s maximum size of transactions, it is chained or linked to the preceding block through a hash as described in the section below. The hash value of one block is inserted into the next block. This makes a link between the new block and the previous block. Repeating a hash function on an unaltered block of data will always generate the same fixed-length value. If a block of data is altered, the resulting hash output will be different. A user can then see the hashes are different and will know the original block has been altered and may no longer be trustworthy.
  • Network—The network is made up of nodes, each containing a complete record of all transactions on a blockchain. No centralized “official” copy exists and no node is “trusted” more than another. The data integrity is maintained by the blockchain being replicated on all of the nodes.

• Sources:
  • The National Archive (archives.gov) NARA Blockchain Whitepaper.