When you think about blockchains, probably the first thing that comes to mind is Bitcoin or cryptos.<\/p>\n
But actually, the technology is extremely versatile and has potential far beyond cryptocurrencies.<\/p>\n
Blockchains have become popular over the past few years because they allow us to secure and verify all kinds of data in a decentralised network that cannot be altered.<\/p>\n
The idea has its roots as far back as 1991, when two computer scientists, Stuart Haber and Scott Stornetta, proposed a system to protect timestamps on documents from being interfered with.<\/p>\n
Satoshi Nakamoto, the anonymous Bitcoin inventor, then built on this system and referenced the two scientists in his Bitcoin whitepaper.<\/p>\n
He successfully deployed the first public blockchain in 2009.<\/p>\n
Put simply, a blockchain is a database in the form of a distributed ledger that uses cryptography to secure any kind of information.<\/p>\n
This ledger takes the form of a series of records or blocks that are each added onto the previous block in the chain, hence the name blockchain.<\/p>\n
Each block contains a timestamp, data, and a hash. This is a unique identifier for all the contents of the block, sort of like a digital fingerprint.<\/p>\n
Crucially, once data has been recorded and verified in a block, it cannot be altered. Instead, if a change has to be made, this is recorded and verified in a new block which is then added to the chain.<\/p>\n
Each new block reinforces the verification of the previous block and hence the entire blockchain.<\/p>\n
The block also contains the hash of the previous block in the chain. These are the backbone of a public blockchain.<\/p>\n
Its how all the participants in a public, decentralised network can come to a consensus on how a block is verified and added to the chain.<\/p>\n
A cryptographic hash function is basically a mathematical algorithm that maps data of arbitrary length to an output of fixed length.<\/p>\n
So, if you want to represent, for example, a list of names of varying lengths, a hash function would output each of these names (the data) into a unique string of numbers of a fixed length. This string of numbers is known as the hash.<\/p>\n
The hash function will return the same hash no matter how many times you input the same data.<\/p>\n
If you even slightly change the inputted data, the hash will change completely.<\/p>\n
Hashing is considered a function that only works one-way. Thats because its highly infeasible - but not impossible - to reverse engineer the data that outputs a given hash without a huge, huge amount of computational power.<\/p>\n
The fastest way to guess the data that produces a given hash is simply to guess and check, over and over again.<\/p>\n
In the Bitcoin blockchain, which uses a proof of work consensus mechanism, computers in the network join in this elaborate guessing game hoping to solve the puzzle first.<\/p>\n
The computer with higher computational power - meaning the capability to run through more guesses faster - is more likely to win the race and therefore verify the block for the reward of Bitcoin.<\/p>\n
Its important to remember that the word blockchain doesnt describe any single database or network. Rather, its a type of technology and there are different kinds of blockchains that work in different ways.<\/p>\n
A public blockchain like Bitcoin, allows anyone to join the network and access the distributed ledger.<\/p>\n
A private blockchain is a closed network. It still uses some decentralisation and a peer to peer system, but overall this kind is controlled by a single entity and access is restricted to a defined network.<\/p>\n
A hybrid blockchain is a combination of a public and private blockchain. This kind of blockchain allows an entity to distribute a ledger with some publicly accessible data but also restrict access to more sensitive data within the network.<\/p>\n
A consortium blockchain has similarities with a private blockchain only. This type of ledger is controlled by multiple entities rather than a single one.<\/p>\n
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