This article explains what blockchain is, why it was developed, how it is being used now, and how could be used in the future. So let’s start with the first question:
What is blockchain?
The word “block” is meant to represent a list of Records While the word “chain” is meant to describe the linked relationship between these lists of Records. Imagine a list of Records linked to another list of Records That’s basically what the term blockchain describes: linked sets of Records The first known use of blockchain type technology was in 1991 by Stewart Haber and Scott Stornetta.
As our world was evolving toward the digital paradigm Concerns about the accuracy, Security, and modifiability of digital records were raised. At this time, use of third party time-stamping services was the only option available that attempted to address these concerns, However, relying on time-stamping services that could be susceptible to bribes or security breaches was not ideal This is because it is imperative to maintain the integrity of digital records by ensuring they cannot be modified backdated or forward dated Otherwise digital record storage was not likely to be adopted or to succeed. this brings up the next question
Why was blockchain developed?
Haber and Stornetta worked on developing a technology that automatically ensured the accuracy, security, and modifiability of digital records using computers and mathematics They decided to employ the use of cryptology to achieve the desired level of privacy and security for digital record-keeping.
Now Cryptography is the study of secure communications while Cryptology is the term used when you study the application of mathematics to cryptography. In 1992 Hebert Sanada and Mr. Bayer enhanced their cryptographically based blockchain technology by adding the use of hash trees, which are also known as Merkle trees.
Let me break this down for you further first. Let’s talk about hashes I’m going to give you an idea of what hashes and hash functions are using Social Security numbers we receive in the United States. Here’s a list of some random names that are commonly found in the United States.
1. Maria Martinez
2. Robert Brown
3. Margaret Sandoval
You can see they all contain different combinations of letters and each of the names is in different lengths. Next, let’s imagine a list of unassigned Social Security numbers.
You can see all of these Social Security numbers are in a standardized format. Each Social Security number contains a set of three whole numbers, a dash, two whole numbers, a dash, and four whole numbers.
Now Let’s imagine the United States uses a computer function to map each person’s name to a unique social security number. Regardless of the length of a person’s name or the letters used within a person’s name, the computer function maps it to the standardized social security number. Thanks to this mapping we can map the name to the correct respective number.
1. Maria Martinez 768-34-6523
2. Robert Brown 986-54-9536
3. Margaret Sandoval 564-21-7645
Now back to hashes. Any computer function that map’s arbitrarily sized data, like a list of people’s names, to a fixed form of data, like Social Security numbers, is called a hash function.
Now the output of the hash function is a fixed form of data, just like a social security number, and this output is commonly known as a hash value, hash code, digest, or simply a hash.
Going back to how the word “block” in blockchain represents a list of Records, Let’s imagine a list of social security numbers or hashes Imagine that each list of social security numbers are stored in blocks and each block represents a region. And the child blocks stemming from this represent states, and a child block stemming from that represents cities.
That should give you a very simplistic idea of what a hash tree is: blocks of hashes stemming from each other that resemble a tree with branches and leaves The incorporation of the hash tree to Haber’s Tornetta and bears 1992 blockchain type technology allowed them to securely store larger sets of digital records. Onto the next question.
How is blockchain being used now?
It wasn’t until 2008 that the first distributed blockchain was created for use as the underlying technology of Bitcoin, a digital currency. It was made by an anonymous person or group that goes by the pseudonym, Satoshi Nakamoto. A common misconception is that bitcoin is synonymous with blockchain. That, however, is not the case.
The blockchain facilitates the secure and private transfer of the digital currency called Bitcoin, as well as posts the transactions to a public ledger to maintain data integrity Right now most financial transactions are facilitated and recorded through the use of private parties such as banks, Visa, MasterCard, and other financial institutions.
The blockchain foundation allows Bitcoin currency transactions to occur securely and privately while maintaining the accuracy of the transactions by posting a time-stamped unmodifiable record of the transaction to a public ledger without the use of a third party. Instead, it uses computers, mathematical algorithms, and cryptology to perform these functions Which allow a direct connection between the Bitcoin users by removing the need for a third party.
So again imagine a list of transactions as a block and each block is being recorded on a public ledger So as blocks of transactions are recorded on a running ledger, it creates a chain of blocks Hence the term blockchain.
So where is this blockchain and what does the term public ledger mean?
Every transaction between Bitcoin users is processed by a computer that has a Bitcoin processing software on it called Bitcoin client. This computer is connected to other computers via an online network. So imagine a computer with Bitcoin processing software on it connected to the Internet, which allows the computer to connect to a network of other computers online with Bitcoin processing software.
The technical term for each computer that participates in the blockchain network is the word “node.” The blockchain network has several nodes or computers that it saves all of the recorded blocks of transactions on. This is where the word distributed or decentralized ledger comes from. Since every transaction is saved on every node or computer with Bitcoin client software on the Bitcoin network, the ledger of all Bitcoin transactions is described as distributed.
So if you have a laptop with Bitcoin client software and keep it connected to the Internet and the Bitcoin network, you will have the entire Bitcoin transaction ledger saved on your computer. So if your computer breaks it will not affect the ledger because the same ledger is being distributed on several other computers around the world. So the network cannot be taken down at any specific point All of these computers process and record blocks of transactions to this public ledger that is saved on all the nodes connected to the Bitcoin network.
The blockchain process creates unique hashes for each transaction, as I mentioned before, that functions to make transactions secure and private. These hashes, as well as time stamps and other unique identifiers, are created for each transaction and recorded on the public ledger.
So anyone can go and look at the Bitcoin public ledger and see all of the transactions When you send or receive Bitcoin, you can identify your transaction by the unique hash that’s created, the address of the user It was sent to, which is a randomly generated set of numbers and letters, or the IP address it was sent from. So on to the next question.
How can blockchain be used in the future?
How else can we utilize blockchain technology besides facilitating digital currency transactions as it does for Bitcoin? There are several applications for blockchain technology in multiple types of industries.
Blockchain technology creates transparency, validates and secures records, manages smart contracts, and eliminates middlemen or third parties.
Some examples of how blockchain could be used include recording land record transactions or mortgages, maintaining digital smart contracts like wills or promissory notes, managing digital identities like passports or birth certificates, housing distributed cloud networks to store information like documents or media, and a myriad of other exciting things. Blockchain will revolutionize our economy and lives over the next few years.
What do you think blockchain technology has in store for us in the future?
What other information should we know and understand about blockchain that I may have missed?
Leave your comments below.