Block chain (database)

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A blockchain[1][2][3]—originally, block chain[4][5][6]—is a distributed database that maintains a continuously-growing list of data records hardened against tampering and revision. It consists of data structure blocks—which hold exclusively data in initial blockchain implementations,[7] and both data and programs in some of the more recent implementations—with each block holding batches of individual transactions and the results of any blockchain executables.[citation needed] Each block contains a timestamp and information linking it to a previous block.[6]

The blockchain is seen as the main technical innovation of bitcoin,[8] where it serves as the public ledger of all bitcoin transactions.[7]Cite error: A <ref> tag is missing the closing </ref> (see the help page). and implemented in the original source code of bitcoin published in 2009.[4][9] This original design has been the inspiration for other cryptocurrencies and distributed databases.[10] By April 2014, there were more than 80 uses of cryptoledgers.

As of 2014, "Blockchain 2.0" was a term used in the distributed blockchain database field.[11][12] By April 2014, at least eight funded projects to develop blockchain 2.0 technology were underway.[11]

The Economist has 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.[13][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]

Bitcoin-based sidechains became possible by linking chains that utilize bitcoin as a transactional currency to support new assets. In this schema, even though there are "multiple chains, no new bitcoins are created."[11]

Description[edit]

In the context of its first digital currency, bitcoin, 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, though, the blockchain resides not in a single server, but across a distributed network of computers. Accordingly, whenever new transactions occur, the blockchain is authenticated across this distributed network, then the transaction is included as a new "block" on the chain."[16]

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

Transactions[edit]

Transactions are the content to be stored in the blockchain. Transactions are created by participants using the system. In the case of cryptocurrencies, a transaction is created any time a cryptocurrency owner sends cryptocurrency to someone.

System users create transactions that are passed from node to node on a best-effort basis. The system implementing the blockchain defines a valid transaction. In cryptocurrency applications, a valid transaction must be digitally signed, spend one or more unspent outputs of previous transactions, and the sum of transaction outputs must not exceed the sum of inputs.

Blocks[edit]

Blocks record and confirm when and in what sequence transactions enter and are logged in the blockchain. Blocks are created by users known as "miners" who use specialized software or equipment designed specifically to create blocks.

In a cryptocurrency system, miners are incentivized to create blocks 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.

Decentralization[edit]

Every node in a decentralized system has a copy of the blockchain. This avoids the need to have a centralized database managed by a trusted third party.[17] Transactions are broadcast to the network using software applications. Network nodes can validate transactions, add them to their copy and then broadcast these additions to other nodes.[7][page needed] To avoid the need for a trusted third party to timestamp transactions, decentralized blockchains use various timestamping schemes, such as proof-of-work.[5]

Advantages[edit]

The core advantages of the blockchain architecture include the following:[according to whom?]

  • 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).
  • 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).
  • 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).
  • A prohibitively high cost to attempt to rewrite or alter transaction history.
  • 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.

Debates[edit]

An ongoing debate disputes whether a private system with verifiers tasked and authorized (permissioned) by a central authority, should still be considered a blockchain.[18][19][20][21][22]

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.[23] 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.[citation needed]

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.[18][20] The Harvard Business Review defines blockchain as a distributed ledger or database open to anyone.[24]

Applications[edit]

The Harvard Business Review conducted a two-year research project exploring how blockchain technology can change the way we securely move and store host "money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes".[24]

Sidechains[edit]

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.[25][verification needed][26] Examples:

Alternative blockchains[edit]

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.[28] Starting with a strong focus on financial applications, blockchain technology is extending to activities including decentralized applications and collaborative organizations that eliminate a middleman.[29][non-primary source needed] Notable designs include:

Trusted timestamp[edit]

The bitcoin blockchain can be used as a trusted timestamp for arbitrary messages. Third party application services store messages directly in the blockchain, allowing anyone who has the blockchain to read the message.[35][36][37][38] Many Bitcoin Core developers discouraged embedding large messages in the bitcoin blockchain, criticizing it as "bloat".[citation needed][39][40][41]

Other applications store a hash value in the blockchain, recording data existence and confirming data integrity without revealing data and without bloating the blockchain.[42][43] This information can be used to implement "colored coins" or side chains to support functionality such as smart contracts.[citation needed]

Other uses[edit]

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[44] and startup Stem are two of the new 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.[45]

Cooperative storage cloud solutions sometimes employ blockchain technology to regulate exchange of data or actual payments for storage space.[citation needed]

Corporate offerings[edit]

Blockchain inspired software is being either tested or implemented by enterprise software companies for various applications.

Education[edit]

In June 2016, the Open University began research into the use of a block chain to store a digital ledger of a person's learning experiences and achievements—including badges—at all of the institutions at which they had studied.[citation needed][52]

Impact[edit]

The president of Sberbank and ex-minister of Economics of Russia, Herman Gref, has stated a view that blockchain technology will have an impact equal to the creation of the Internet, based on its capability of revolutionizing banking operations.[53]

References[edit]

  1. ^ a b 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. ^ 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 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 .
  5. ^ a b 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' 
  6. ^ a b Nakamoto, Satoshi (2008). "Bitcoin: A Peer-to-Peer Electronic Cash System" (PDF). Bitcoin.org. Retrieved 2008-10-31. 
  7. ^ a b c Antonopoulos, Andreas M. (2014). "Chapters 1, 2, 8". Mastering Bitcoin. Unlocking Digital Cryptocurrencies. Sebastopol, CA: O'Reilly Media. ISBN 1449374034. Retrieved 3 November 2015. [page needed]
  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 [attributed] (2009-01-09). "Bitcoin v0.1 released". Austin, TX: Satoshi Nakamoto Institute. Retrieved 2016-06-18. 
  10. ^ Postscapes Staff (Harwood, Trevor, Ed.) (2014). "Blockchains and the Internet of Things". Postscapes. Retrieved 18 June 2016. 
  11. ^ a b c Swanson, Tim (2014-04-08). "Blockchain 2.0 – Let a Thousand Chains Blossom". LTB Network. Retrieved 2016-03-30. 
  12. ^ "Block Chain 2.0: The Renaissance of Money". Wired. January 2015. Retrieved 2016-04-06. 
  13. ^ Yakovlev, Alexander [interviewee] & Kovlyagina, Tatiana [interviewer] (2016-04-15). "НРД проголосовал за блокчейн" [NSD blockchain vote]. Bankir.ru (in Russian). 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.] 
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  16. ^ Cite error: The named reference idealog20160520 was invoked but never defined (see the help page).
  17. ^ Brito, Jerry & Castillo, Andrea (2013). "Bitcoin: A Primer for Policymakers" (PDF). Fairfax, VA: Mercatus Center, George Mason University. Retrieved 22 October 2013. 
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  20. ^ 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. 
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  23. ^ Greenspan, Gideon (2015-07-19). "Ending the bitcoin vs blockchain debate". multichain.com. Retrieved 2016-06-18. 
  24. ^ a b Tapscott, Don (10 May 2016). "The Impact of the Blockchain Goes Beyond Financial Services". Harward Business Review. Retrieved 16 May 2016. 
  25. ^ Back, Adam; Corallo, Matt; Dashjr., Luke; Friedenback, Mark; Maxwell, Gregory; Miller, Andrew; Poelstra, Andrew; Timón, Jorge & Wuille, Pieter (2014). "Enabling Blockchain Innovations with Pegged Sidechains" (PDF). San Francisco, CA: Blockstream.com. Retrieved 22 October 2014. 
  26. ^ Brown, Richard Grendal (2014). "A simple Explanation of Bitcoin "Sidechains"" (personal blog). self-published. Retrieved 22 October 2014. 
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  41. ^ 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. 
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Further reading[edit]

External links[edit]
SHA-256-based
Scrypt-based
CryptoNote-based
Other proof-of-work
Non proof-of-work
Technology
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