What is Blockchain?
John Craddock, Microsoft MVP, acclaimed international speaker and identity guru explains what is Blockchain
Blockchain is a Distributed Ledger Technology (DLT) which allows a definitive ledger of transactions to be created without the need for a central authority to arbitrate which transactions are valid. There are many different types of blockchain, however.
Blockchain stems from Satoshi Nakamoto’s 2008 whitepaper proposing an electronic cash system that sent peer-to-peer transactions without the need for a central authority. His proposal became Bitcoin which allows individuals to create transactions that move funds between interested parties. Cryptography is core to the implementation, and funds can only be moved through a cryptographically verifiable transaction. The challenge is preventing a double-spend where an individual sends the same funds to two different parties. To solve that problem requires a definitive ledger that holds confirmed transaction, a transaction is only added to the ledger if the sources funds were available for spending.
How Blockchain works
The Bitcoin network is made up of nodes (compute engines) that communicate with each other via a peer-to-peer network. Each node will have a view, which may be different, of the current validated but unconfirmed transactions. The transaction must be added to a ledger to confirm it, but with no central authority, who adds it?
Blocks of transactions
The ledger is made up of blocks of transactions, the very first block of transactions in the ledger is referred to as the genesis block, the next block (2) links to the genesis block, block 3 links to block 2 and before you know it you have a chain of linked blocks – Blockchain! Nodes compete to add the next block to the chain, the winning node creating the next set of confirmed transactions. To add a block the node has to solve a cryptographic puzzle, the solving of the puzzle is referred to as mining. Gaming theory and probability comes into play, and the building of the blockchain will be distributed across the mining nodes.
When a transaction is added to the chain, it is confirmed. We now have a definitive ledger of confirmed transactions created without the need for a central authority. Although this explanation has been simplified and based on Bitcoin and transactions involving money.
Uses of Blockchain
A blockchain can be used for managing any type of transaction: digital identity, property, reports, contracts etc. Rules (smart contracts) can be implemented to specify the conditions that are required to execute a valid transaction.
Want to know more about Blockchain?
Blockchain underpins Decentralized Identity. We recommend you watch John’s session The Ultimate Guide to Blockchain before you watch John’s Introduction to Decentralized Identity. As with all John’s sessions, there’s no waffle, just great, in-depth technical explanations.
Published March 2019