The term “block chain” is the fundamental system of cryptocurrencies. The structure similar to a notebook where everything is written also ensures the security of cryptocurrencies.
What is Blockchain?
Blockchain simply means the ledger. It ensures the security of transactions by keeping a record of transactions made in a crypto network. As the network expands and transactions increase, so does the blockchain.
Blockchains are also resistant to subsequent changes of records by not being kept in a central place, that is, the ledgers are distributed in a decentralized manner.
Cryptography and Blockchain
Each block in the blockchain typically contains transaction information, a cryptographic hash function of the previous block, and a timestamp. A blockchain is typically managed by an end-to-end network for node-to-node communication and confirmation of new blocks connected to a protocol.
When the data in any block is desired to be changed, the block containing the data and all blocks created later must be changed. This requires the approval of the majority of nodes in the network at a time for each block writing before the next node is created. It is also possible to detect a possible abuse, since the user who made the change is known in each block.
The History of Blockchain
Studies on blockchain date back to the 90s. The first study on this subject was carried out by Stuart Haber and W. Scott Stornetta in 1991. In 1992, Bayer, Haber and Stornetta incorporated cryptographic protocols called Merkle trees into blockchain designs.
The first working blockchain was conceptualized in 2008 by a person or group called Satoshi Nakamoto, also known as the creator of Bitcoin. Later, this blockchain design by Nakamoto was implemented as the core component of the crypto-currency Bitcoin of which he was the creator, providing functionality as the registry for all transactions on the Bitcoin network. With the use of the blockchain, Bitcoin became the first digital or cryptocurrency to solve the double-spending problem without requiring a central authority and inspired many new cryptocurrencies.
The Potential of Blockchain Technology
Blockchain technology offers great potential to transform business operating models in the long term, along with the information society and Industry 4.0. Blockchain distributed ledger technology provides the potential to create new foundations for virtually any global economic and social system. With the technological infrastructure it brings, it offers an alternative to traditional business models that focus on low-cost solutions. The use of blockchain promises to bring significant efficiency to supply chains, financial infrastructures and decentralized social networks.
Questions answered by the blog:
- What is Blockchain?
- What is the relationship of Cryptography and Blockchain?
- How did blockchain originate?
- Is blockchain technology used outside of cryptocurrencies?
- What is the potential of blockchain technology?