A Simplified Technical Description of How Blockchain Works
When people discuss blockchain technology, they tend to combine the general concept of blockchain technology with Bitcoin’s specific implementation.
Effectively, Bitcoin’s implementation of the blockchain concept has become equivalent to the general meaning and definition of blockchain technology. In talking in these terms, though, the true capabilities inherent within blockchain become severely limited.
To innovate more quickly we need to tease apart the concept from Bitcoin’s specific implementation.
In this article, Lantah developers will focus on the concept of blockchain.
Blockchain is a distributed, immutable, ledger. More descriptively, a blockchain is defined [thank you Wikipedia] to be a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. Blockchain resists modification. An open, distributed ledger, blockchain records 2-party transactions in a completely verifiable and permanent way. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks.
The recording or hashing process
Block data cannot be altered retroactively. Further, all subsequent blocks indicate this change. Therefore, it cannot be tampered without illegal cooperation of the network majority. The Blockchain process is highly self-securing and allows for an extremely low probability of Byzantine failure. Blocks build upon all previous blocks The process of hashing or time stamping all information up to the current 10-minute window takes place as follows: A large number of distributed systems (nodes), acting independently, keep a copy of the entire blockchain. This process is coordinated to prevent erroneous or malicious transactions from being posted in each subsequent copy of the blockchain, ensuring all records previously posted are agreed upon by the majority of distributed systems participating. This is how Bitcoin was secure to transact over the Internet between 2-parties without the need for a 3rd party to intermediate---such as a bank or credit card company. Final thoughts The Bitcoin implementation of blockchain has additional features and attributes. We will discuss in a future blog how implementers of blockchain make design decisions that address the needs of specific applications.