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Blockchain summarized

 As explained by Wikipedia, “Blockchain was invented by Satoshi Nakamoto”—the pseudonym of an unknown person or persons—“in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin… [which] made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server.”


While blockchain is still largely confined to use in recording and storing transactions for cryptocurrencies such as Bitcoin, proponents of blockchain technology are developing and testing other uses for blockchain, including these:


  • Blockchain for payment processing and money transfers. 
  • Blockchain for monitoring of supply chains. 
  • Blockchain for digital IDs. 
  • Blockchain for data sharing. 
  • Blockchain for copyright and royalties protection. 
  • Blockchain for Internet of Things network management. 
  • Blockchain for healthcare. 

Blockchain explained



As described in Blockchain for Dummies, “Blockchain gets its name from the way it stores transaction data—in blocks linked together to form a chain. As the number of transactions grows, so does the blockchain. Blocks record and confirm the time and sequence of transactions, which are then logged into the blockchain, within a discrete network governed by rules agreed upon by network participants.

“Each block contains a hash (digital fingerprint or unique identifier), a batch timestamp of the last valid transactions, and a hash of the previous block. The previous block hash joins the blocks together and prevents any block from being altered or a block from being inserted between two existing blocks. In theory, this method makes the blockchain tamper-proof.

The four key concepts of blockchain are:


  • Shared ledger. A shared ledger is a "plug-in-only" distributed system of records shared across a business network. "With a shared ledger, transactions are recorded only once, eliminating the duplication of effort that is typical of traditional business networks."                                                   
  • Authorization. Authorizations ensure that transactions are secure, authenticated and verifiable. "With the ability to limit network participation, organizations can more easily comply with data protection regulations such as those set forth in the Health Insurance Portability and Accountability Act (HIPAA)" and the EU's General Data Protection Regulation (GDPR).                                                                                                    
  • Smart contracts. A smart contract is “an agreement or set of rules governing business transactions; it is stored on the blockchain and executed automatically as part of the transaction.”                                                             
  • Consensus. Based on consensus, all parties agree to a transaction verified by the network. Blockchains have various consensus mechanisms, including proof of stake, multisignature, and PBFT (Practical Byzantine Fault Tolerance).                                                                                      

Each blockchain network has various participants who play these roles, including but not limited to:


  • Blockchain users. Participants (usually corporate users) with permission to join the blockchain network and transact with other network participants.
  • Regulators. Blockchain users with special permissions to oversee transactions taking place on the network.
  • Blockchain network operators. Individuals who have special authority and power to define, create, manage and monitor the blockchain network.
  • Certification Authorities. Individuals who issue and manage the various types of certificates needed to run a permissioned blockchain.

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