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Fundamentals of The Blockchain PDF
Fundamentals of The Blockchain PDF
Fundamentals of
the Blockchain
technologies since the invention of the Internet. Due to its versatile, open-source
nature, this innovative technology has the potential to disrupt a wide range of
In this report, you will discover what the blockchain is, how it works, why it
matters and who the most prominent companies are that are pushing blockchain
technology forward.
between two parties in a secure, transparent and immutable manner. Data is recorded
in blocks that are verified by network participants. Hence, the name blockchain.
makes it available to all participants around the world for verification. Once
and cannot be altered. The blockchain, therefore, enables us for the first time to
securely record, store, and transfer data without the need for a central authority to
In the case of Bitcoin, individuals can make electronic money transactions without the
need for a bank or payment provider; therefore, de facto enabling each user to become
creator(s), Satoshi Nakamoto, with the release of the Bitcoin whitepaper in 2008.
Due to the open-source nature of the Bitcoin blockchain, a large number of new
blockchain networks launched in the past ten years to provide new features and
decentralised application.
Why Blockchain?
Perhaps the most pertinent question about blockchain technology is: Why do we
need it?
The blockchain provides an entirely new way of sending, recording, and storing
data of any kind without the need for central authorities. It alleviates the need
for intermediaries to the benefit of the end user and, thus, heralds in a new era of
decentralisation.
The blockchain can be used to process financial transactions, record land titles,
ensure fair voting, increase cyber security, verify digital identities, send digital
menial tasks, blockchains automate away the centre. Instead of putting the taxi
driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers
work with the customer directly.” - Vitalik Buterin, blockchain developer and
founder of Ethereum.
Decentralisation ushers in a new digital peer-to-peer economy where users interact
with (and pay) each other directly without costly intermediaries standing in the
middle to take their cut. The blockchain is, therefore, poised to have a substantial
For example, two individuals can enter into an agreement where one party rents out
digital currency. The terms of the agreement can be coded into a smart contract
that self-executes once the stay has been completed and the terms of the
agreement have been met. The full payment is then received by the party that
provided the spare room without someone like Airbnb taking a cut of the
transaction.
The blockchain can also be used to streamline existing operational processes for
intermediaries, which can reduce costs, improve operational efficiency, and increase
Additionally, the blockchain is able to create entirely new technologies (like smart
Components of a Blockchain
While different blockchain protocols come with various features, the majority of
where transactions are saved. The primary ingredient of a block is the hash.
The algorithm turns any input received into a cryptographic code called a hash. A
block also contains the timestamp of the transaction as well as the hash value of
the previous transaction. This ensures that only “correct” blocks are included in the
blockchain.
database held and updated independently by each participant (or node), who can
access the network without any permission from any other participant or central
Nodes are perhaps the most interesting part of a blockchain as they are in the
hands of the network participants. Nodes can be run on devices such as a PC,
laptop, or mobile phone with access to the Internet. A distributed network of nodes
incentive structures.
transactions in exchange for a financial reward in the form of new bitcoin. For each
or transaction on a blockchain.
The blockchain has several features that make it stand out among existing
database solutions.
Speed: Blockchain transaction times can range from a few seconds to a few
hours, with the average across all major blockchains being less than 15 minutes.
secure and timely manner. Through the use of blockchain technology, these
Security: Perhaps the biggest selling point of the blockchain is that it does
not provide a single point of failure as it runs on a network of distributed
nodes. Conversely, if a centralised system fails, the entire network is down.
When one or multiple nodes on a blockchain network are failing, the
network will continue to run. Not only is this vital to ensure business
continuity but it also adds a layer of cybersecurity on a network.
The combination of the blockchain’s features has not existed prior to the
invention of Bitcoin and blockchain technology, which is one of the many
reasons that make this new technology so powerful and potentially
impactful.
of blockchains have evolved since the creation of Bitcoin. Currently, there are
While there are hundreds if not thousands of blockchain startups across the
new technology.
Binance, Coinbase, and Kraken are leading digital asset exchanges that provide
cryptoasset trading services to a global user base. Binance stands out from the
trio as it has recently launched its own blockchain, which is poised to become a
Moreover, leading Wall Street bank, JPMorgan Chase, announced the launch
of its very own blockchain-powered settlement currency, called JPMCoin, to
enable low-cost, high-speed money transfers between the bank and its
corporate clients. JPMCoin runs on the bank’s internal blockchain system,
called Quorum, and has its value pegged one-to-one to the US dollar.
Conclusion
the blockchain will not play a significant role in the transfer and storage of data.
From tokenised assets and health care records management to digital identity
and e-voting, the blockchain is poised to become an integral part of society.