Blockchain

A unique and increasingly popular implementation of cryptography that was developed in 2008.

Blockchain itself is described as the method that a continuously expanding list of transactions are secured using cryptography. In blockchain, each additional record added to the chain is passed through a hashing function, and the value of the previous block is added to the new one. This validates each record in the hash all the way to the beginning of the chain, ensuring that the list hasn't been tampered with.

The blockchain is recorded on something called an open public ledger, which is a decentralized peer-to-peer network of records of the blockchain. This allows any user of blockchain to be able to view records equally, making it one of the most open systems to date. The first major use of blockchain technology was with the advent of the first cryptocurrency Bitcoin.

Each block in the chain contains some information about its corresponding transaction including:

• Timestamp
• Date
• Parties involved
• A Unique, Identifying Hash

Transactional Process

1. Bob requests a transaction with Alice. Said request is made using Bob's secret key and Alice's public key.
2. The transaction is represented online as a block.
3. The block is distributed to everyone connected to the open public ledger.
4. The members of the open public ledger verify the block.
5. The block is added to the chain, providing an indisputable and transparent record of the transaction.
6. The contents of the transaction are exchanged between Alice and Bob.

The blockchain transaction happens relatively quickly, in a matter of minutes. Attackers that tamper with records on a single node are ignored, since copies of the legitimate transaction record are stored on many, many, many other nodes. In exchange for verifying transactions and generating hashes for said transactions, nodes are rewarded with a predetermined amount of the network's cryptocurrency.

Potential Applications (Raw Lesson Content)

Sending money is not the only way blockchain can be used. Some large companies, including Microsoft and IBM, are working to adapt different technologies to the blockchain.

Many transactions that currently rely on a paper-based system could benefit from blockchain. For example, a car or house title could be transferred over the blockchain. Because the transactions are transparent, this would create a clear picture of legal ownership.

A blockchain could be used to track the movement of a product, such as food. The ability to follow and see every stop the product has made on its way to the consumer would provide assurances of the product's safety.