Blockchain is a complex system of digital ledgers and has multiple uses. Its most popular application is in the digital currency Bitcoin. Digital currencies are like cash, but in digital form. They are often encrypted with blockchain as the public ledger, thereby securing online transactions. This makes cryptocurrencies more secure than traditional currencies.
Blockchains are distributed ledgers with each node holding a copy of the entire chain. They require a network to validate newly mined blocks. In addition, the blockchain is transparent. Participants in a blockchain have unique alphanumeric identification numbers, which is stored in each node’s public record. This creates a system of checks and balances that maintains the integrity of the chain and builds trust among users.
Bitcoin, the most popular cryptocurrency, uses blockchains to store transactions. Bitcoin uses a mathematical algorithm called Proof of Work to make new entries into the chain. This method uses the Hashcash puzzles, which were designed by Adam Back in 1997. Dwork was part of a team that proposed the Junk Mail concept back in 1992. In 2016, venture capital investment in blockchain-related projects was weak in the United States but was booming in China. The blockchains used in these cryptocurrencies are known as open (public) blockchains.
A blockchain is a decentralized public ledger where blocks of transactions are stored in chronological order. The data in a blockchain is secured using cryptography, which makes it difficult to forge and alter. The data is also shared with all participants in the network. It is resistant to modification by any third party, requiring the collusion of a majority of the participating systems.