Blockchain Technology

What is Blockchain Technology?

Blockchain technology is simply a distributed ledger; or put in another way, a write-only database which is shared across a distributed group of computers. Often, this network is shared with computers across the world which are linked in a peer-to-peer network.

The way it works sounds complicated but is actually rather simple. The database is write-only and is constantly growing as “completed” blocks are added to it with more data. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

Cryptocurrency

Blockchains for the business

Blockchain technology can be useful in business. It can be used to share data across an entire network with an immutable database of transactions. The transactions don’t need to be monetary transactions, and can contain any kinds of data. For example, a blockchain can be used as an authorization and role store across a organization.

Related Terminology

Consensus

The consensus is achieved when all participants of the network agree on the transaction order, ensuring that all transaction are valid.

Wallet

A Bitcoin wallet is a collection of private keys but may also refer to client software used to manage those keys and to make transactions on the Bitcoin network.

Bitcoin

Address A Bitcoin address is an identifier of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment.

Private

Key A private key is a secret piece of data that proves your right to spend bitcoins from a specific wallet through a cryptographic signature. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. Guard your private keys with the utmost care. If you lose your private keys, you lose your money.

Public Key

A public key is a piece of data that allows others to send you bitcoin. The corresponding private key (comparable to an ATM PIN) is secret. Because the private key is the “ticket” that allows someone to spend bitcoins, it is important that these are kept secure. Private keys can be stored on computer files, but are also often written on paper. Signature A cryptographic signature is a mathematical mechanism that allows someone to prove ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked by some mathematical magic. When your Bitcoin software signs a transaction with the appropriate private key, the whole network can see that the signature matches the bitcoins you’re spending.