Blockchain: Difference between revisions

From Wikipedia, the free encyclopedia
Browse history interactively
← Previous editNext edit →
Content deleted Content added
VisualWikitext
add source
→‎Sidechains: Not adequately sourced information. Remove
Line 101: Line 101:


Bitcoin-based sidechains became possible by linking chains that utilize bitcoin as a transactional currency to support new assets. In this scheme, even with "multiple chains, no new bitcoins are created".{{R|ltbn0140408}}
Bitcoin-based sidechains became possible by linking chains that utilize bitcoin as a transactional currency to support new assets. In this scheme, even with "multiple chains, no new bitcoins are created".{{R|ltbn0140408}}

Sidechains are networks based on protocols that are isolated from a bitcoin-type blockchain, allowing activity to exist in isolation until confirmation on the blockchain, at which point transferability becomes bidirectional.{{R|t5}}{{verification needed|date=June 2016}}{{R|t5bBrownBlog}} Examples:
* Liquid – Exchange sidechain developed by [[Blockstream]]{{R|t6}}


=== Alternative blockchains ===
=== Alternative blockchains ===

Revision as of 06:05, 7 September 2016


A blockchain[1][2][3]—originally, block chain[4][5]—is a distributed database that maintains a continuously-growing list of records secured from tampering and revision. It consists of data structure blocks that may contain data[6]: 6 [failed verification] or programs[7]: @ 01:45–02:42 [failed verification]—with each block holding batches of individual transactions[6]: 6, 31–41  and the results of any blockchain executables.[7]: @ 01:45–02:42 [better source needed] Each block contains a timestamp and a link to a previous block.[8][6]: 6 

The blockchain—conceived in 2008 and first implemented in 2009—is the main technical innovation of bitcoin, where it serves as the public ledger for bitcoin transactions.[1] In this case, every user is allowed to connect to the network, send new transactions to it, verify transactions, and create new blocks, making the bitcoin blockchain permissionless.[6]: 67  The bitcoin blockchain design has been the inspiration for other applications.[1][3]

Definition

A blockchain consists of blocks that hold timestamped batches of valid transactions. Each block includes the hash of the prior block in the blockchain, linking the two. The linked blocks form a chain, with only one (successor) block allowed to link to one other (predecessor) block.[1]

History

The original definition was published by someone using the name Satoshi Nakamoto in 2008[9][10] and implemented in the original source code of bitcoin published in 2009.[5][11] By April 2014, more than 80 uses of such cryptoledgers had been documented.

As of 2014, "Blockchain 2.0" was a term used in the distributed blockchain database field.[12][13] By April 2014, at least eight funded projects to develop blockchain 2.0 technology were under way.[12]

The Economist described one implementation of this second-generation programmable blockchain as coming with "a programming language that allows users to write more sophisticated smart contracts, thus creating invoices that pay themselves when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level."[1]

In 2016, the central securities depository of the Russian Federation (NSD) announced a pilot project based on blockchain technology.[14] Various regulatory bodies in the music industry have started testing models that use blockchain technology for royalty collection and management of copyrights around the world.[15]

Description

In the bitcoin context, a blockchain is a digital ledger that records every bitcoin transaction that has ever occurred. It is protected by cryptography so powerful that breaking it is typically dismissed as "impossible". More importantly, the blockchain resides across a network of computers. Whenever new transactions occur, the blockchain is authenticated across this distributed network, before the transaction can be included as the next block on the chain."[16]

A blockchain implementation consists of two kinds of records: transactions and blocks.

Blocks

Blocks record one or more transactions, and for each time period, the "transactions conducted are verified, cleared, and stored in a block which is linked to the preceding block, thereby creating a chain. Each block must refer to the preceding block to be valid. This structure permanently time-stamps and stores exchanges of value, preventing anyone from altering the ledger."[6]: 6 

A transaction's presence in a block confirms when and in what sequence it occurred. Blocks are created by users known as "miners" who use specialized software or equipment designed specifically to come to consensus on which transactions verifiably belong in each block, and which block will become the next block of the growing chain. Miners compete with each other to see who can first complete the next block and therefore earn the reward(s) for doing so. Miners may collect two types of rewards: a pre-defined per-block award, and fees offered within the transactions themselves, payable to any miner who confirms the transaction.[6]: 31–41 

Decentralization

Every node in a decentralized system has a copy of the blockchain. No centralized "official" copy exists and no user is "trusted" more than any other.[4] Transactions are broadcast to the network using software applications. Mining nodes validate transactions, add them to the block they're creating and then broadcast the completed block to other nodes.[17]: ch. 08  Blockchains use various timestamping schemes, such as proof-of-work to serialize changes.[18]

Access to blockchains

Terminology and controversy

According to Don Tapscott in his book Blockchain Revolution, Blockchain technology may be permissionless—public, or "open for anyone to use"—or permissioned—private, closed off and accessible only to chosen parties which have specific "credentials giving them a license to operate [on a] particular blockchain".[6]: 66–68 [19]

Since all early blockchains were permissionless, controversy has arisen over whether permissioned databases of chained blocks of data should even be considered blockchains. The debate is ongoing and disputes whether a private system with verifiers tasked and authorized (permissioned) by a central authority, should still be considered a blockchain.[20][21][22][23][24]

Proponents of permissioned or private chains argue that the term "blockchain" may be applied to any data structure which batches data into blocks which are timestamped and that these blockchains serve as a distributed version of multiversion concurrency control (MVCC) in databases.[25] Just as MVCC prevents two transactions from concurrently modifying a single object in a database, blockchains prevent two transactions from spending the same single output in a block chain.[6]: 30–31  The Harvard Business Review defines blockchain as a distributed ledger or database open to anyone.[26]

The opponents say that the permissioned systems look like traditional corporate databases, not supporting decentralized verification of the data, and that such systems are not hardened against tampering and revision by their operators.[20][22]

Tapscott notes that the financial services industry has created a different terminology: "referring to it as distributed ledger technology."[27]

Permissionless

Both Bitcoin and Ethereum are public blockchains. As of May 2016, Bitcoin is the largest while Ethereum is the second largest but the "fastest-growing public blockchain."[6]: 83  "Some have called the bitcoin blockchain a public utility like the Internet.[6]: 83 

Permissioned

The New York Times notes that many corporations are using blockchain networks "with private blockchains, independent of the public system."[3]

According the Tapscott in Blockchain Revolution, permissioned blockchains offer several advantages, as well as have a number of disadvantages, when compared to public blockchains:[6]: 67–68 

Advantages
  • transactions may be kept confidential on permissioned blockchains, an idea that is of particular interest to banks and offerors of financial services.
  • members can change the rules of the blockchain if desired
  • cost may be reduced as only transactions from members need be validated and brought into the blockchain consensus. This removes the need for anonymous miners, and reduces electrical energy usage by the overall blockchain system.
  • the risk of a 51-percent attack is lessened because all parties are trusted
  • nodes can be trusted to be well connected
  • they may be easier for regulators to monitor
  • they avoid "exposing a regulated financial institution to the risk of either transacting with an unknown party ... or creating a dependency on unknown service provider", both of which are generally unacceptable from a regulatory point of view.
Disadvantages
  • "the easier it is to change the rules, the more likely it is to flout" those rules.[6]: 67–68  Nikolai Hampton pointed out in Computerworld that "There is also no need for a ‘51 per cent’ attack on a private blockchain, as the private blockchain (most likely) already controls 100 per cent of all block creation resources. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 per cent of their network and alter transactions however you wished."[28] This has a set of particularly profound adverse implications during a financial crises or debt crises like the financial crisis of 2007–08, where politically powerful actors may make decisions that favor some groups at the expense of others
  • private blockchains prevent a set of positive "network effects that enable a technology to scale rapidly"[6]: 67–68 
  • they can inhibit neutrality by limiting market freedoms[6]: 67–68 
  • they tend to inhibit "open value innovation [which makes the] technology more likely to stagnate and become vulnerable."[6]: 67–68 
  • "The Bitcoin blockchain is protected by the massive group mining effort. It’s unlikely that any private blockchain will try to protect records using gigawatts of computing power — it’s time consuming and expensive."[28]
  • "Within a private blockchain there is also no ‘race’; there’s no incentive to use more power or discover blocks faster than competitors. This means that many in-house blockchain solutions will be nothing more than cumbersome databases."[28]

Applications

Blockchains are a technology that may be integrated into multiple areas. Examples include a payment system and digital currency, facilitating crowdsales, or implementing prediction markets and generic governance tools.[29]

Major applications of blockchain include cryptocurrencies—including Bitcoin, BlackCoin, Dash, Nxt and Ripple—and blockchain platforms—Lightning for peer-to-peer crowdfunding, Factom as a distributed registry, Gems for decentralized messaging, MaidSafe (software) for decentralized applications, Storj for a distributed cloud, and Tezos for decentralized voting.[30]

Advantages

Core blockchain advantages include:

  • The ability for independent nodes to converge on a consensus of the latest version of a large data set such as a ledger, even when the nodes are run anonymously, have poor interconnectivity and have operators who are dishonest or malicious (see Sybil attack).[6]: 31–33, 36–41 
  • The ability for any well-connected node to determine, with reasonable certainty, whether a transaction does or does not exist in the data set (see consistency).[6]: 30–33 
  • The ability for any node that creates a transaction to, after a confirmation period, determine with a reasonable level of certainty whether the transaction is valid, able to take place and become final (i.e., that no conflicting transactions were confirmed into the blockchain elsewhere that would invalidate the transaction, such as the same currency units "double-spent" somewhere else).[6]: 6–7, 30–32 
  • A prohibitively high cost to attempt to rewrite or alter transaction history.[6]: 7, 245 
  • Automated conflict 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.[6]: 30–31, 46, 190, 259 

Applications

The Harvard Business Review conducted a two-year research project exploring how blockchain technology can securely move and store host "money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes".[26] As of 2016, some parts of the financial industry are implementing distributed ledgers for use in banking.[19][31]

Sidechains

Bitcoin-based sidechains became possible by linking chains that utilize bitcoin as a transactional currency to support new assets. In this scheme, even with "multiple chains, no new bitcoins are created".[12]

Alternative blockchains

Alternative blockchains (altchains) are based on bitcoin technology in concept and/or code.[8] These designs generally add functionality to the blockchain design. Altchains can provide solutions including other digital currencies, although tokens used in these designs are not always considered to be such. Altchains target performance, anonymity, storage and applications such as smart contracts.[32] Starting with a strong focus on financial applications, blockchain technology is extending to activities including decentralized applications and collaborative organizations that eliminate a middleman.[33][non-primary source needed] Notable designs include:

Trusted timestamp

The bitcoin blockchain can be used as a trusted timestamping service for arbitrary messages. Third party application services store messages directly in the blockchain, allowing anyone who has a copy of the blockchain to read the message.[37] Many Bitcoin Core developers discourage embedding non-monetary related transactions in the bitcoin blockchain, criticizing it as "bloat".[38][failed verification][39][failed verification]

Other applications store a hash value in the blockchain, recording data existence and confirming data integrity without revealing data and without bloating the blockchain.[40]

Other uses

Blockchain technology can be used to create a permanent, public, transparent ledger system for compiling data on sales, storing rights data, and tracking digital use and payments to content creators, such as musicians. A concept such as Imogen Heap's Mycelia[41] and startup Stem are two initiatives using blockchain technology to create a distributed ledger for music industry copyrights with the aim of expediting and validating payment to artists, publishers and writers.[42] A service was launched in July 2016 that allows managers to use a blockchain for tracking high-value parts moving through a supply chain. Everledger is "building systems to record the movement of diamonds from mines to jewelry stores" and is one of the inaugural clients of IBM's blockchain-based tracking service.[43]

A new blockchain-based digital currency for large financial institution back-office settlement is under development by a consortium of large banks, including UBS, Deutsche Bank, Santander, BNY Mellon, and ICAP. The Financial Times said that it "is one of the most concrete examples of banks co-operating on a specific blockchain technology to harness the power of decentralized computer networks and improve the efficiency of financial market plumbing."[44]

In 2016 DARPA solicited proposals for a secure decentralized messaging system based on a private blockchain, for use in the United States Department of Defense[45]

Commercial offerings

Distributed ledgers and other blockchain inspired software are being developed by commercial organizations for various applications:

See also

References

  1. ^ a b c d e Economist Staff (2015-10-31). "Blockchains: The great chain of being sure about things". The Economist. Retrieved 18 June 2016. [Subtitle] The technology behind bitcoin lets people who do not know or trust each other build a dependable ledger. This has implications far beyond the crypto currency.
  2. ^ Morris, David Z. (2016-05-15). "Leaderless, Blockchain-Based Venture Capital Fund Raises $100 Million, And Counting". Fortune (magazine). Retrieved 2016-05-23.
  3. ^ a b c Popper, Nathan (2016-05-21). "A Venture Fund With Plenty of Virtual Capital, but No Capitalist". New York Times. Retrieved 2016-05-23.
  4. ^ a b "Bitcoin: A Primer for Policymakers" (PDF). Fairfax, VA: Mercatus Center, George Mason University. 2013. Retrieved 22 October 2013. {{cite web}}: Cite uses deprecated parameter |authors= (help)
  5. ^ a b Trottier, Leo (2016-06-18). "original-bitcoin" (self-published code collection). github. Retrieved 2016-06-18. This is a historical repository of Satoshi Nakamoto's original bit coin sourcecode.
  6. ^ a b c d e f g h i j k l m n o p q r s t Tapscott, Don; Tapscott, Alex (May 2016). The Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. ISBN 978-0670069972. {{cite book}}: |access-date= requires |url= (help)
  7. ^ a b c Lubin, Joseph (2015). DEVCON1: Towards a Dynamic Economic, Social and Political Mesh. Ethereum. Retrieved 2016-04-12.
  8. ^ a b "Blockchain". Investopedia. Retrieved 19 March 2016. Based on the Bitcoin protocol, the blockchain database is shared by all nodes participating in a system.
  9. ^ Nakamoto, Satoshi (2008). "Bitcoin: A Peer-to-Peer Electronic Cash System" (PDF). Bitcoin.org. Retrieved 2008-10-31.
  10. ^ Nakamoto, Satoshi (2008-11-01). "Bitcoin P2P e-cash paper". Austin, TX: Satoshi Nakamoto Institute. Retrieved 2016-06-18.
  11. ^ Nakamoto, Satoshi (2009-01-09). "Bitcoin v0.1 released". Austin, TX: Satoshi Nakamoto Institute. Retrieved 2016-06-18.
  12. ^ a b c Swanson, Tim (2014-04-08). "Blockchain 2.0 – Let a Thousand Chains Blossom". LTB Network. Retrieved 2016-03-30.
  13. ^ "Block Chain 2.0: The Renaissance of Money". Wired. January 2015. Retrieved 2016-04-06.
  14. ^ "НРД проголосовал за блокчейн" [NSD blockchain vote]. Bankir.ru (in Russian). 2016-04-15. Retrieved 18 June 2016. "Национальный расчетный депозитарий запустил пилотный проект на основе технологии распределенного реестра. Создание прототипа системы электронного голосования владельцев облигаций на блокчейне анонсировал на Биржевом форуме председатель правления НРД Эдди Астанин [The National Settlement Depository started the pilot project based on the technology of the distributed register. Creation of the prototype system of electronic voting for owners of bonds based on blockchain was announced at the Exchange forum by the chairman of the board of NSD, Eddie Astanin.] {{cite journal}}: Cite uses deprecated parameter |authors= (help)
  15. ^ Aitken, Roger. "MUSE: Leveraging Blockchain Technology To Revolutionize Music Industry". forbes.com. Retrieved 18 June 2016.
  16. ^ Hall, David (2016-05-20). "Blockchain: the end of bureaucracy or a new tool for the incumbents?". Idealog. Auckland University of Technology. Retrieved 2016-05-25.
  17. ^ Antonopoulos, Andreas M. (2014). Mastering Bitcoin. Unlocking Digital Cryptocurrencies. Sebastopol, CA: O'Reilly Media. ISBN 1449374034. Retrieved 3 November 2015.
  18. ^ Kopstein, Joshua (2013-12-12). "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 'block chain'
  19. ^ a b Epstein, Jim (2016-05-06). "Is Blockchain Technology a Trojan Horse Behind Wall Street's Walled Garden?". Reason. Retrieved 2016-06-29. mainstream misgivings about working with a system that's open for anyone to use. Many banks are partnering with companies building so-called private blockchains that mimic some aspects of Bitcoin's architecture except they're designed to be closed off and accessible only to chosen parties. ... [but some believe] that open and permission-less blockchains will ultimately prevail even in the banking sector simply because they're more efficient.
  20. ^ a b Voorhees, Erik (2015-10-30). "It's All About the Blockchain". Money and State. Retrieved 2015-11-02.
  21. ^ Reutzel, Bailey (2015-07-13). "A Very Public Conflict Over Private Blockchains". PaymentsSource. New York, NY: SourceMedia, Inc. Retrieved 18 June 2016.
  22. ^ a b Casey, Michael J. (2015-04-15). "Moneybeat/BitBeat: Blockchains Without Coins Stir Tensions in Bitcoin Community". The Wall Street Journal. Retrieved 18 June 2016.
  23. ^ dinbits Staff (2015-11-03). "The "Blockchain Technology" Bandwagon Has A Lesson Left To Learn". dinbits.com. Retrieved 2016-06-18.
  24. ^ DeRose, Chris (2015-06-26). "Why the Bitcoin Blockchain Beats Out Competitors". American Banker. Retrieved 18 June 2016.
  25. ^ Greenspan, Gideon (2015-07-19). "Ending the bitcoin vs blockchain debate". multichain.com. Retrieved 2016-06-18.
  26. ^ a b Tapscott, Don (10 May 2016). "The Impact of the Blockchain Goes Beyond Financial Services". Harvard Business Review. Retrieved 16 May 2016.
  27. ^ Tapscott, Don. "Blockchain Revolution". Retrieved 2 September 2016.
  28. ^ a b c Hampton, Nikolai (2016-09-05). "Understanding the blockchain hype: Why much of it is nothing more than snake oil and spin". Computerworld. IDG. Retrieved 2016-09-05.
  29. ^ Tarun, Parker (2016-08-04). "stolen. Maybe that's healthy". Mixpanel. The Signal. Retrieved 2016-08-07.
  30. ^ Tapscott, Don; Tapscott, Alex (May 2016). The Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. p. 94. ISBN 978-0670069972. major cryptocurrencies—Bitcoin, BlackCoin, Dash, Nxt and Ripple--to the major blockchain platforms--Lightning for peer-to-peer crowdfunding, Factom as a distributed registry, Gems for decentralized messaging, MaidSafe for decentralized applications, Storj for a distributed cloud, and Tezos for decentralized voting {{cite book}}: |access-date= requires |url= (help)
  31. ^ Redrup, Yolanda (2016-06-29). "ANZ backs private blockchain, but won't go public". Australia Financial Review. Retrieved 2016-07-07. Blockchain networks can be either public or private. Public blockchains have many users and there are no controls over who can read, upload or delete the data and there are an unknown number of pseudonymous participants. In comparison, private blockchains also have multiple data sets, but there are controls in place over who can edit data and there are a known number of participants.
  32. ^ "Why Bitcoin may herald a new era in finance". www.economistinsights.com. The Economist Group. Retrieved 9 June 2015.
  33. ^ De Filippi, Primavera. From competition to cooperation. TEDxCambridge. Retrieved 8 October 2015.
  34. ^ "This Israeli Ride-Sharing App Is the Utopian, Hippie Uber". Bloomberg. Retrieved 27 January 2016. {{cite web}}: Cite uses deprecated parameter |authors= (help)
  35. ^ Ayral, Sandrine. "Bitcoin 2.0 Crowdfunding Is Real Crowdfunding". Techcrunch. Retrieved 27 January 2016.
  36. ^ Miller, Carl. "In 2015 social media companies strengthened their rule. In 2016 they will face rebellion". The Telegraph. Retrieved 27 January 2016.
  37. ^ "Student Aims to Boost Free Speech with Bitcoin Messaging App". coindesk.com. 16 December 2014. Retrieved 18 June 2016.
  38. ^ "Why New Forms of Spam Could Bloat Bitcoin's Block Chain". coindesk.com. 3 September 2014. Retrieved 18 June 2016.
  39. ^ Security; management, One pane of glass to rule them all? Vanity-thy name is cloud; when, Cyberthreat: How to respond and; department, If Jack Sprat ran an IT. "Bitcoin, schmitcoin. Let's play piggyback on the blockchain". theregister.co.uk. Retrieved 18 June 2016.
  40. ^ "Developers Battle Over Bitcoin Block Chain". coindesk.com. 25 March 2014. Retrieved 18 June 2016.
  41. ^ Bartlett, Jamie (6 September 2015). "Imogen Heap: saviour of the music industry?". theguardian.com. Retrieved 18 June 2016.
  42. ^ Redman, Jamie (27 April 2016). "Blockchain-Powered Stem Raises 4.5m to Disrupt Music Industry". bitcoin.com. Retrieved 18 June 2016.
  43. ^ Nash, Kim S. (2016-07-14). "IBM Pushes Blockchain into the Supply Chain". Wall Street Journal. Retrieved 2016-07-24.
  44. ^ http://www.ft.com/cms/s/0/1a962c16-6952-11e6-ae5b-a7cc5dd5a28c.html#axzz4IFwM8Egw
  45. ^ http://intelligencecommunitynews.com/darpa-seeks-small-business-help-to-develop-a-secure-messaging-platform/
  46. ^ Allison, Ian (2016-05-03). "Deloitte to build Ethereum-based 'digital bank' with New York City's ConsenSys". International Business Times.
  47. ^ Allison, Ian (2016-01-20). "R3 connects 11 banks to distributed ledger using Ethereum and Microsoft Azure". International Business Times.
  48. ^ "IBM Reveals Proof of Concept for Blockchain-Powered Internet of Things". coindesk.com. 17 January 2015. Retrieved 18 June 2016.
  49. ^ "Hyperledger blockchain code almost comes together for IoT". rethink-iot.com. 1 April 2016. Retrieved 18 June 2016.
  50. ^ "SafeShare Releases First Blockchain Insurance Solution For Sharing Economy". EconoTimes. 2016-03-18. Retrieved 2016-06-15.

Cite error: A list-defined reference named "bc1" is not used in the content (see the help page).
Cite error: A list-defined reference named "Prisco-11-Nov-2015" is not used in the content (see the help page).
Cite error: A list-defined reference named "t5" is not used in the content (see the help page).
Cite error: A list-defined reference named "t5bBrownBlog" is not used in the content (see the help page).

Cite error: A list-defined reference named "t6" is not used in the content (see the help page).

Further reading

Retrieved from "https://en.wikipedia.org/w/index.php?title=Blockchain&oldid=738150480"