This is a series of articles we are writing about digitial currencies. In the first of the series, we ask the question , “What is blockchain ?”
A blockchain facilitates a secure online connection commonly associated with Bitcoin and is managed by a peer to peer network.
Blockchain is a decentralised and distributed ledger that keeps a record of transactions across many computer systems to guard against records been altered without all the subsequent blocks having been altered and allows users to verify and audit transactions inexpensively.
Blockchain is authenticated by multiple users working together and this results in a robust system where user’s uncertainty regarding data security is marginal.
The blockchain confirms each unit of value is only transferred once which solves a long-standing issue of double spending as block chains use what is called a “Value-exchange protocol” these transactions can be completed more quickly, safely and cheaper than traditional systems.
The blockchain database consists of two records transactions and blocks, blocks hold branches of valid transactions that are hashed and encoded into a “Merkle Tree”, Each block has a hash of the previous block in the chain linking the two. The linked blocks for a chain which confirmed the integrity of the previous block, some blockchains create blocks as frequently as 5 seconds.
Sometimes separate blocks can be created these are called (Orphan blocks) which causes a temporary fork, a block chain holds a secure hash based history and algorithm for scoring different versions so it will always use the highest version & blocks not included (Orphans), When a higher version is received the database is over written and republished to their peer. Block chain is built with the best version always changing; adding the score of new blocks onto older blocks as there are incentives to extending new blocks onto old blocks.
Major applications of blockchain include cryptocurrencies, such as bitcoin, and blockchain platforms such as Factom as a distributed registry, Gems for decentralized messaging, Storj and Sia for distributed cloud storage, and Tezos for decentralised voting.