Blockchain

A blockchain is a solution that stores data in a list of blocks that are securely linked together via cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Since each block contains information about the previous block, they effectively form a chain with each additional block linking to the ones before it.

With this design, blockchain transactions cannot be modified or deleted because, once recorded, the data in any given block cannot be changed without altering all subsequent blocks, which is not a permitted action.

Further, blockchains are managed by a peer-to-peer (P2P) computer network for use as a public distributed ledger. A copy of the blockchain is maintained on each participating computer (known as a node). To add further control, a new transaction can be added to the blockchain only with consensus from all nodes.

Blockchain and Cryptocurrencies

Blockchain solutions require high-powered computing devices, complex software algorithms, a highly customized and efficient database, and high bandwidth networks, all working together to execute transactions and manage data in a fully synchronized manner.

The first widely known and public implementation of a Blockchain solution is Bitcoins - the first of the many cryptocurrencies available today. There is a general misconception that Bitcoins and Blockchain are synonymous. In reality, Bitcoins are just one implementation of a Blockchain. There are many other applications of Blockchain technology.

Blockchains can be used as open transaction systems, such as the cryptocurrency networks that allow anyone to transact and may have millions of users, or closed transaction systems, such as those used by private enterprises to manage transactions with a small group of their business partners. While the underlying architecture, design, and technology may be the same for both types of solutions, the processes can be very different. For example, private Blockchains work differently from the decentralized model since there is a governing entity, or group of entities, that decides who can access the system and control every aspect of the transaction process. They still retain the other benefits of transparency, immutability, traceability, and security.

The architecture of Blockchain systems, the design of Blockchain solutions, the technology that powers Blockchains, and the business processes when using a Blockchain solution are all very different from traditional systems and applications.