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Blockchain

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A block chain or blockchain is a permissionless distributed database based on the bitcoin protocol[1] that maintains a continuously growing list of data records hardened against tampering and revision, even by operators of the data store's nodes. The initial and most widely known application of the block chain technology is the public ledger of transactions for bitcoin[2] which has been the inspiration for similar implementations often known as altchains.[3]

Name

The block chain is primarily tamper resistant through timestamping the hash of batches of recent valid transactions into "blocks", proving that the data must have existed at the time. Each block includes the prior timestamp, forming a chain of blocks, with each additional timestamp reinforcing the ones before it,[1] thus giving the database type its name. Each block chain record is enforced cryptographically and hosted on machines working as data store nodes extending this validation to the network as a whole.[4]

Basic principles

The core advantages of the block chain architecture include the following:

  • The ability for a significant number of nodes to converge on a single consensus of the most up-to-date version of a large data set such as a ledger, even when the nodes are run anonymously, have poor connectivity with one another, and have operators who may be dishonest or malicious (see Sybil attack).
  • The ability for any node that is well-connected to other nodes to determine, with a reasonable level of certainty, whether a transaction does or does not exist in the confirmed data set (see consistency).
  • The ability for any node that creates a transaction to, after a certain period of confirmation time, determine with a reasonable level of certainty whether the transaction is valid, able to take place, and become final (i.e. that there were no conflicting transactions confirmed into the block chain elsewhere that would make the transaction invalid, such as the same currency units "double-spent" somewhere else).
  • A prohibitively high cost to attempt to rewrite or alter any transaction history.
  • An automated form of resolution that ensures that conflicting transactions (such as two or more attempts to spend the same balance in different places) never become part of the confirmed data set.

A block chain implementation consists of two kinds of records: transactions and blocks. Transactions are the actual data to be stored in the block chain, and blocks record and confirm when and in what sequence transactions became journaled as a part of the block chain database. Transactions are created by participants using the system in the normal course of business and blocks are created by users known as "miners" who use specialized software or equipment designed specifically to create blocks. In the case of cryptocurrencies, a transaction is created anytime someone sends cryptocurrency to another.

Users of the system create transactions which are loosely passed around from node to node on a best-effort basis. The definition of what constitutes a valid transaction is based on the system implementing the block chain. In cryptocurrency applications, a valid transaction is one that is properly digitally signed, spends one or more unspent outputs of previous transactions, and the sum of transaction outputs does not exceed the sum of inputs.

Meanwhile, miners attempt to create blocks that confirm and incorporate those transactions into the blockchain. In a cryptocurrency system such as bitcoin, miners are incentivized to create blocks in order to collect two types of rewards: a pre-defined per-block award, and fees offered within the transactions themselves, payable to any miner who successfully confirms the transaction.

Decentralisation

Every node in a decentralized cryptocurrency has a complete or partial copy of the block chain. This avoids the need to have a centralized database that other systems, such as PayPal, require.[5] Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the block chain is the only place that cryptocurrency can be said to exist, in the form of unspent outputs of transactions.[6]: ch. 5 

Transactions of the form payer X sends Y currency to payee Z are broadcast to this network using software applications. Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes.[6]: ch. 8 

Cryptocurrencies use various timestamping schemes, such as proof-of-work, to avoid the need for a trusted third party to timestamp transactions added to the block chain. This avoids anyone easily double-spending the currency.[7]

Token-less block chain debate

There is an ongoing[8] debate[9][10] as to whether a blockchain-like system without a native token can still be considered a blockchain[11][12]. Some have argued that token-free block chains serve as a distributed version of multiversion concurrency control (MVCC) in databases.[13] Just as MVCC prevents two transactions from modifying a single row in a database, block chains prevent two transactions from spending a single output in a block chain.

Others have interpreted blockchains' function in a different way, arguing that blockchains are more akin to finite state machine automata "where the state of the system is updated sequentially, via atomic transitions (transactions) that are replicated across every machine, in order."[14]

Data storage

Cryptocurrencies use block chains to timestamp transactions to prevent double-spending.

The bitcoin block chain can also be used as a trusted timestamp for arbitrary messages, not just transaction information. Various 3rd party application services store messages directly in the block chain, so anyone who has the block chain can read the message.[15][16][17][18] Bitcoin core developer Mike Hearn among others have discouraged embedding large messages in the bitcoin block chain, criticizing it as "bloat".[19][20][21]

Other applications store a hash value in the block chain, demonstrating data existence and confirming data integrity without revealing actual data and without bloating the block chain.[22][23] This extra information in the block chain can be used to implement "colored coins" or side chains to support functionality such as smart contracts.

Sidechain Technology

Sidechains[24] are private or public networks that may or may not be based on the bitcoin protocol and are isolated from the main block chain network, allowing workflow and functionality to exist in confinement until confirmation on the block chain is required or desired, at which point bidirectional transferability is supported. These systems work in conjunction with network(s) their technology is designed to support (the block chain, altchains, multiple networks, etc...). Examples are

Alternative blockchains

Alternative or alternate blockchains (commonly known as altchains) are based on the technology that underpins bitcoin in concept and/or its software code base. These designs generally provide different or alternate functionality or additional utility not present in the initial blockchain design. Altchains can be operated in private or public environments providing a wide variety of solutions including other digital currencies, although tokens used in these designs are not always considered as such. Development of these designs have produced features for performance, anonymity, storage and smart contracts.[26] Starting with a strong focus on financial applications, uses of blockchain technology are progressively extending to many new sectors of activities, including the creation of decentralized applications and collaborative organisations that eliminate a middleman.[27][non-primary source needed] Notable designs include:

Right management in the music industry

The music industry suffers from a lack of information that penalizes right holders such as artists, composers, song writers ... [31][better source needed]

As we can not systematically identify the exhaustive lists of right holders of a song, some payees are being left out. Blockchains Technology 'provide the secure issuance and distribution of digital assets, including listing and registration of musical works for its clients and helping collecting societies provide more transparency and efficiency to all market participants.'. [32]

See also

References

  1. ^ a b Satoshi Nakamoto (2008). "Bitcoin: A Peer-to-Peer Electronic Cash System" (PDF). Bitcoin.org. Retrieved 31 October 2008.
  2. ^ Antonopoulos, Andreas (December 2014). Mastering Bitcoin - Unlocking Digital Cryptocurrencies. O'Reilly Media. p. http://chimera.labs.oreilly.com/books/1234000001802/ch02.html. ISBN 1-4493-7403-4. {{cite book}}: |access-date= requires |url= (help); External link in |ref= (help)
  3. ^ "Blockchains and the Internet of Things". Postscapes.
  4. ^ "How does Bitcoin work?". Bitcoin.org. Retrieved 20 May 2015.
  5. ^ Jerry Brito and Andrea Castillo (2013). "Bitcoin: A Primer for Policymakers" (PDF). Mercatus Center. George Mason University. Retrieved 22 October 2013.
  6. ^ a b Andreas M. Antonopoulos (April 2014). Mastering Bitcoin. Unlocking Digital Crypto-Currencies. O'Reilly Media. Retrieved 23 October 2014.
  7. ^ Joshua Kopstein (12 December 2013). "The Mission to Decentralize the Internet". The New Yorker. Retrieved 30 December 2014. The network's "nodes"—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the "blockchain"
  8. ^ "It's All About the Blockchain - Money and State". Money and State. Retrieved 2015-11-02.
  9. ^ Reutzel, Bailey. "A Very Public Conflict Over Private Blockchains". Payments Source. SourceMedia.| title=Blockchain Conflict
  10. ^ "Blockchain".
  11. ^ "Blockchain Bandwagon Lesson". dinbits. 2015.
  12. ^ "Why the Bitcoin Blockchain Beats Out Competitors". American Banker. 2015.
  13. ^ Greenspan, Gideon. "Ending the bitcoin vs blockchain debate".
  14. ^ "Secrets of Consistent Hashchains I: Eventual Consistency". Engineering DAPPs. Retrieved 2015-11-02.
  15. ^ Aaron van Wirdum. "Student Aims to Boost Free Speech with Bitcoin Messaging App".
  16. ^ Ken Shirriff. "Hidden surprises in the Bitcoin blockchain and how they are stored: Nelson Mandela, Wikileaks, photos, and Python software".
  17. ^ "Bitcoin Strings: blockchain in words"
  18. ^ "CryptoGraffiti".
  19. ^ Daniel Cawrey. "Why New Forms of Spam Could Bloat Bitcoin's Block Chain".
  20. ^ "What are the key differences between different ways of embedding messages in the blockchain?".
  21. ^ Danny Bradbury. "Bitcoin, schmitcoin. Let's play piggyback on the blockchain".
  22. ^ "What is proof of existence?".
  23. ^ Danny Bradbury."Developers Battle Over Bitcoin Block Chain".
  24. ^ Adam Black, Matt Corallo, Luke Dashjr, Mark Friedenback, Gregory Maxwell, Andrew Miller, Andrew Poelstra, Jorge Timon, and Pieter Wuille (2014). "An explanation of Bitcoin Sidechains". Retrieved 22 October 2014.{{cite web}}: CS1 maint: multiple names: authors list (link)
  25. ^ SAMBURAJ DAS (2015). "The First SideChain for Bitcoin Exchanges". CrryptoCoinsNews.
  26. ^ "Why Bitcoin may herald a new era in finance". www.economistinsights.com. The Economist Group. Retrieved 9 June 2015.
  27. ^ "Primavera De Filippi: From competition to cooperation". TEDxCambridge. Retrieved 8 October 2015.
  28. ^ Ayral, Sandrine. "Bitcoin 2.0 Crowdfunding Is Real Crowdfunding". Techcrunch. Retrieved 27 January 2016.
  29. ^ Miller, Carl. "In 2015 social media companies strengthened their rule. In 2016 they will face rebellion". The Telegraph. Retrieved 27 January 2016.
  30. ^ Coppola, Benmeleh, Gabrielle, Yaacov. "This Israeli Ride-Sharing App Is the Utopian, Hippie Uber". Bloomberg. Retrieved 27 January 2016.{{cite web}}: CS1 maint: multiple names: authors list (link)
  31. ^ "Blockchain will become the operating system for music?".
  32. ^ "Blockchain will fix music data".
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