What Is a Blockchain?

A blockchain is a distributed database that is shared among the nodes of a computer network.
As a database, a blockchain stores information electronically in digital format. Blockchains
are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for
maintaining a secure and decentralized record of transactions. The innovation with a
blockchain is that it guarantees the fidelity and security of a record of data and generates trust
without the need for a trusted third party.

One key difference between a typical database and a blockchain is the way the data is
structured. A blockchain collects information together in groups, known as "blocks" that hold
sets of information. Blocks have certain storage capacities and, when filled, are closed and
linked to the previously filled block, forming a chain of data known as the “blockchain.” All
new information that follows that freshly added block is compiled into a newly formed block
that will then also be added to the chain once filled.

A database usually structures its data into tables whereas a blockchain, like its name implies,
structures its data into chunks (blocks) that are strung together. This data structure inherently
makes an irreversible timeline of data when implemented in a decentralized nature. When a
block is filled it is set in stone and becomes a part of this timeline. Each block in the chain is
given an exact timestamp when it is added to the chain.

How Does a Blockchain Work?

The goal of blockchain is to allow digital information to be recorded and distributed, but not
edited. In this way, a blockchain is the foundation for immutable ledgers, or records of
transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also
known as a distributed ledger technology (DLT).

First proposed as a research project in 1991,1 the blockchain concept predated its first
widespread application in use, Bitcoin in 2009. In the years since, the use of blockchains has
exploded via the creation of various cryptocurrencies, decentralized finance (DeFi)
applications, non-fungible tokens (NFTs), and smart contracts.
Blockchain Decentralization

Imagine that a company owns a server farm comprised of 10,000 computers use to maintain
a database holding all of its client's account information. This company owns a warehouse
building that contains all of these computers under one roof and has full control of each of
these computers and all the information contained within them. This, however, provides a
single point of failure. What happens if the electricity at that location goes out? Or its internet
connection is severed? What if it burns to the ground? What if a bad actor erases everything
with a single keystroke? In any case, the data is lost or corrupted.

What a blockchain does, is to allow the data held in that database to be spread out among
several network nodes at various locations. This not only creates redundancy, but also
maintains the fidelity of the data stored therein: if somebody tries to alter a record at one
instance of the database, the other nodes would not be altered and so would prevent a bad
actor from doing so. If one user tampers with Bitcoin’s record of transactions, all other nodes
would cross-reference each other and easily pinpoint the node with the incorrect information.
This system helps to establish an exact and transparent order of events. This way, no one node
within the network can alter information held within it.

Because of this, the information and history of transactions of a cryptocurrency) is

irreversible. Such a record could be a list of transactions (such as with a cryptocurrency), but
it also is possible for a blockchain to hold a variety of other information like legal contracts,
state identifications, or a company’s product inventory.

Transparency

Because of the decentralized nature of Bitcoin’s blockchain, all transactions can be

transparently viewed by either having a personal node or by using blockchain explorers that
allow anyone to see transactions occurring live. Each node has its own copy of the chain that
gets updated as fresh blocks are confirmed and added. This means that if you wanted to, you
could track Bitcoin wherever it goes.

For example, exchanges have been hacked in the past, where those who kept Bitcoin on the
exchange lost everything. While the hacker may be entirely anonymous, the Bitcoins that they
extracted are easily traceable. If the Bitcoins that were stolen in some of these hacks were to
be moved or spent somewhere, it would be known.

Of course, the records stored in the Bitcoin blockchain (as well as most others) are encrypted.
This means that only the owner of a record can decrypt it to reveal their identity (using
a public-private key pair). As a result, users of blockchains can remain anonymous while
preserving transparency.

Is Blockchain Secure?

Blockchain technology achieves decentralized security and trust in several ways. First, new
blocks are always stored linearly and chronologically. That is, they are always added to the
“end” of the blockchain. After a block has been added to the end of the blockchain, it is
extremely difficult to go back and alter the contents of the block unless a majority of the
network has reached a consensus to do so. That’s because each block contains its own hash,
along with the hash of the block before it, as well as the previously mentioned time stamp.
Hash codes are created by a mathematical function that turns digital information into a string
of numbers and letters. If that information is edited in any way, the hash code changes as well.

Let’s say a hacker, who also runs a node on a blockchain network, wants to alter a blockchain
and steal cryptocurrency from everyone else. If they were to alter their own single copy, it
would no longer align with everyone else's copy. When everyone else cross-references their
copies against each other, they would see this one copy stand out and that hacker's version of
the chain would be cast away as illegitimate.

Succeeding with such a hack would require that the hacker simultaneously control and alter
51% or more of the copies of the blockchain so that their new copy becomes the majority copy
and thus, the agreed-upon chain. Such an attack would also require an immense amount of
money and resources as they would need to redo all of the blocks because they would now
have different timestamps and hash codes.

Due to the size of many cryptocurrency networks and how fast they are growing, the cost to
pull off such a feat would probably be insurmountable. Not only would this be extremely
expensive, but it would also likely be fruitless. Doing such a thing would not go unnoticed, as
network members would see such drastic alterations to the blockchain. The network members
would then "hard fork" off to a new version of the chain that has not been affected. This would
cause the attacked version of the token to plummet in value, making the attack ultimately
pointless as the bad actor has control of a worthless asset. The same would occur if the bad
actor were to attack the new fork of Bitcoin. It is built this way so that taking part in the
network is far more economically incentivized than attacking it.

Bitcoin vs. Blockchain

Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two
researchers who wanted to implement a system where document timestamps could not be
tampered with. But it wasn’t until almost two decades later, with the launch of Bitcoin in
January 2009, that blockchain had its first real-world application.

The Bitcoin protocol is built on a blockchain. In a research paper introducing the digital
currency, Bitcoin’s pseudonymous creator, Satoshi Nakamoto, referred to it as “a new
electronic cash system that’s fully peer-to-peer, with no trusted third party.”2

The key thing to understand here is that Bitcoin merely uses blockchain as a means to
transparently record a ledger of payments, but blockchain can, in theory, be used to immutably
record any number of data points. As discussed above, this could be in the form of
transactions, votes in an election, product inventories, state identifications, deeds to homes,
and much more.

Currently, there are tens of thousands of projects looking to implement blockchains in a

variety of ways to help society other than just recording transactions. For example, to use
blockchains as a way to vote securely in democratic elections. The nature of blockchain’s
immutability means that fraudulent voting would become far more difficult to occur. For
example, a voting system could work such that each citizen of a country would be issued a
single cryptocurrency or token. Each candidate would then be given a specific wallet address,
and the voters would send their token or crypto to whichever candidate's address they wish to
vote for. The transparent and traceable nature of blockchain would eliminate the need for
human vote counting as well as the ability of bad actors to tamper with physical ballots.

Blockchain vs. Banks

Feature Banks Bitcoin

Typical brick-and-mortar
banks are open from 9:00
am to 5:00 pm on
No set hours; open 24/7,
Hours open weekdays. Some banks are
365 days a year.
open on weekends but with
limited hours. All banks are
closed on banking holidays.

•Card payments: This fee

varies based on the card and
is not paid by the user
directly. Fees are paid to the
payment processors by Bitcoin has variable
stores and are usually transaction fees
charged per transaction. determined by miners and
The effect of this fee can users. This fee can range
sometimes make the cost of between $0 and $50 but
goods and services rise. users have the ability to
Transaction Fees •Checks: can cost between determine how much of a
$1 and $30 depending on fee they are willing to pay.
your bank. •ACH: ACH This creates an open
transfers can cost up to $3 marketplace where if the
when sending to external user sets their fee too low
accounts. •Wire: Outgoing their transaction may not
domestic wire transfers can be processed.
cost as much as $25.
Outgoing international wire
transfers can cost as much
as $45.

•Card payments: 24-48 Bitcoin transactions can

hours •Checks: 24-72 hours take as little as 15 minutes
Transaction Speed to clear •ACH: 24-48 hours and as much as over an
•Wire: Within 24 hours hour depending on
unless international *Bank network congestion.
Feature Banks Bitcoin

transfers are typically not

processed on weekends or
bank holidays

Bank accounts and other

Anyone or anything can
banking products require
participate in Bitcoin’s
"Know Your Customer"
network with no
Know Your Customer (KYC) procedures. This
identification. In theory,
Rules means it is legally required
even an entity equipped
for banks to record a
with artificial intelligence
customer's identification
could participate.
prior to opening an account.

Government-issued
identification, a bank An internet connection
account, and a mobile and a mobile phone are
Ease of Transfers
phone are the minimum the minimum
requirements for digital requirements.
transfers.

Bank account information

Bitcoin can be as private
is stored on the bank’s
as the user wishes. All
private servers and held by
Bitcoin is traceable but it
the client. Bank account
is impossible to establish
privacy is limited to how
who has ownership of
secure the bank's servers are
Bitcoin if it was
Privacy and how well the individual
purchased anonymously.
user secures their own
If Bitcoin is purchased on
information. If the bank’s
a KYC exchange then the
servers were to be
Bitcoin is directly tied to
compromised then the
the holder of the KYC
individual's account would
exchange account.
be as well.

Assuming the client The larger the Bitcoin

Security practices solid internet network grows the more
security measures like using secure it gets. The level of
secure passwords and two- security a Bitcoin holder
 Feature Banks Bitcoin

factor authentication, a has with their own Bitcoin

bank account's information is entirely up to them. For
is only as secure as the this reason it is
bank's server that contains recommended that people
client account information. use cold storage for larger
quantities of Bitcoin or
any amount that is
intended to be held for a
long period of time.

Banks reserve the right to

The Bitcoin network itself
deny transactions for a
does not dictate how
variety of reasons. Banks
Bitcoin is used in any
also reserve the right to
shape or form. Users can
Approved Transactions freeze accounts. If your
transact Bitcoin how they
bank notices purchases in
see fit but should also
unusual locations or for
adhere to the guidelines of
unusual items they can be
their country or region.
denied.

Due to KYC laws,

If Bitcoin is used
governments can easily
anonymously
track people's banks
Account Seizures governments would have
accounts and seize the
a hard time tracking it
assets within them for a
down to seize it.
variety of reasons.

How Are Blockchains Used?

As we now know, blocks on Bitcoin’s blockchain store data about monetary transactions.
Today, there are more than 10,000 other cryptocurrency systems running on blockchains. But
it turns out that blockchain is actually a reliable way of storing data about other types of
transactions, as well.

Some companies that have already incorporated blockchain include Walmart, Pfizer, AIG,
Siemens, Unilever, and a host of others. For example, IBM has created its Food Trust
blockchain to trace the journey that food products take to get to their locations 3

Why do this? The food industry has seen countless outbreaks of e. Coli, salmonella, listeria,
as well as hazardous materials being accidentally introduced to foods. In the past, it has taken
weeks to find the source of these outbreaks or the cause of sickness from what people are
eating. Using blockchain gives brands the ability to track a food product’s route from its
origin, through each stop it makes, and finally its delivery. If a food is found to be
contaminated then it can be traced all the way back through each stop to its origin. Not only
that, but these companies can also now see everything else it may have come in contact with,
allowing the identification of the problem to occur far sooner, potentially saving lives. This is
one example of blockchains in practice, but there are many other forms of blockchain
implementation.

Banking and Finance

Perhaps no industry stands to benefit from integrating blockchain into its business operations
more than banking. Financial institutions only operate during business hours, five days a
week. That means if you try to deposit a check on Friday at 6 p.m., you will likely have to
wait until Monday morning to see that money hit your account. Even if you do make your
deposit during business hours, the transaction can still take one to three days to verify due to
the sheer volume of transactions that banks need to settle. Blockchain, on the other hand, never
sleeps.

By integrating blockchain into banks, consumers can see their transactions processed in as
little as 10 minutes, basically the time it takes to add a block to the blockchain, regardless of
holidays or the time of day or week. With blockchain, banks also have the opportunity to
exchange funds between institutions more quickly and securely. In the stock trading business,
for example, the settlement and clearing process can take up to three days (or longer, if trading
internationally), meaning that the money and shares are frozen for that period of time.

Given the size of the sums involved, even the few days that the money is in transit can carry
significant costs and risks for banks. European bank Santander and its research partners put
the potential savings at $15 billion to $20 billion a year.4

Capgemini, a French consultancy, similarly estimates that consumers could save up to $16
billion in banking and insurance fees each year through blockchain-based applications.5
Currency
Blockchain forms the bedrock for cryptocurrencies like Bitcoin. The U.S. dollar is controlled
by the Federal Reserve. Under this central authority system, a user’s data and currency are
technically at the whim of their bank or government. If a user’s bank is hacked, the client’s
private information is at risk. If the client’s bank collapses or they live in a country with an
unstable government, the value of their currency may be at risk. In 2008, several banks failed
were bailed out partially using taxpayer money. These are the worries out of which Bitcoin
was first conceived and developed.

By spreading its operations across a network of computers, blockchain allows Bitcoin and
other cryptocurrencies to operate without the need for a central authority. This not only
reduces risk but also eliminates many of the processing and transaction fees. It can also give
those in countries with unstable currencies or financial infrastructures a more stable currency
with more applications and a wider network of individuals and institutions they can do
business with, both domestically and internationally.

Using cryptocurrency wallets for savings accounts or as a means of payment is especially

profound for those who have no state identification. Some countries may be war-torn or have
governments that lack any real infrastructure to provide identification. Citizens of such
countries may not have access to savings or brokerage accounts and therefore, no way to safely
store wealth.

Healthcare
Health care providers can leverage blockchain to securely store their patients’ medical records.
When a medical record is generated and signed, it can be written into the blockchain, which
provides patients with the proof and confidence that the record cannot be changed. These
personal health records could be encoded and stored on the blockchain with a private key, so
that they are only accessible by certain individuals, thereby ensuring privacy.

Records of Property
If you have ever spent time in your local Recorder’s Office, you will know that the process of
recording property rights is both burdensome and inefficient. Today, a physical deed must be
delivered to a government employee at the local recording office, where it is manually entered
into the county’s central database and public index. In the case of a property dispute, claims
to the property must be reconciled with the public index.

This process is not just costly and time-consuming—it is also riddled with human error, where
each inaccuracy makes tracking property ownership less efficient. Blockchain has the
potential to eliminate the need for scanning documents and tracking down physical files in a
local recording office. If property ownership is stored and verified on the blockchain, owners
can trust that their deed is accurate and permanently recorded.

In war-torn countries or areas that have little to no government or financial infrastructure, and
certainly no “Recorder’s Office,” it can be nearly impossible to prove ownership of a property.
If a group of people living in such an area is able to leverage blockchain, transparent and clear
timelines of property ownership could be established.

Smart Contracts
A smart contract is a computer code that can be built into the blockchain to facilitate, verify,
or negotiate a contract agreement. Smart contracts operate under a set of conditions that users
agree to. When those conditions are met, the terms of the agreement are automatically carried
out.

Say, for example, a potential tenant would like to lease an apartment using a smart contract.
The landlord agrees to give the tenant the door code to the apartment as soon as the tenant
pays the security deposit. Both the tenant and the landlord would send their respective portions
of the deal to the smart contract, which would hold onto and automatically exchange the door
code for the security deposit on the date the lease begins. If the landlord doesn’t supply the
door code by the lease date, the smart contract refunds the security deposit. This would
eliminate the fees and processes typically associated with the use of a notary, third-party
mediator, or attornies.

Supply Chains
As in the IBM Food Trust example, suppliers can use blockchain to record the origins of
materials that they have purchased. This would allow companies to verify the authenticity of
their products, along with such common labels as “Organic,” “Local,” and “Fair Trade.”
As reported by Forbes, the food industry is increasingly adopting the use of blockchain to
track the path and safety of food throughout the farm-to-user journey.

Voting
As mentioned, blockchain could be used to facilitate a modern voting system. Voting with
blockchain carries the potential to eliminate election fraud and boost voter turnout, as was
tested in the November 2018 midterm elections in West Virginia. Using blockchain in this
way would make votes nearly impossible to tamper with. The blockchain protocol would also
maintain transparency in the electoral process, reducing the personnel needed to conduct an
election and providing officials with nearly instant results. This would eliminate the need for
recounts or any real concern that fraud might threaten the election.

PROS AND CONS OF BLOCKCHAINS

For all of its complexity, blockchain’s potential as a decentralized form of record-keeping is

almost without limit. From greater user privacy and heightened security to lower processing
fees and fewer errors, blockchain technology may very well see applications beyond those
outlined above. But there are also some disadvantages.

Pros
• Improved accuracy by removing human involvement in verification
• Cost reductions by eliminating third-party verification
• Decentralization makes it harder to tamper with
• Transactions are secure, private, and efficient
• Transparent technology
• Provides a banking alternative and way to secure personal information for citizens of
countries with unstable or underdeveloped governments

Cons
• Significant technology cost associated with mining bitcoin
• Low transactions per second
• History of use in illicit activities such as on the Dark Web
• Regulation varies by jurisdiction and remains uncertain
• Data storage limitations

Benefits of Blockchains

Accuracy of the Chain

Transactions on the blockchain network are approved by a network of thousands of computers.
This removes almost all human involvement in the verification process, resulting in less
human error and an accurate record of information. Even if a computer on the network were
to make a computational mistake, the error would only be made to one copy of the blockchain.
In order for that error to spread to the rest of the blockchain, it would need to be made by at
least 51% of the network’s computers—a near impossibility for a large and growing network
the size of Bitcoin’s.
Cost Reductions
Typically, consumers pay a bank to verify a transaction, a notary to sign a document, or a
minister to perform a marriage. Blockchain eliminates the need for third-party verification
and, with it, their associated costs. Business owners incur a small fee whenever they accept
payments using credit cards, for example, because banks and payment processing
companies have to process those transactions. Bitcoin, on the other hand, does not have a
central authority and has limited transaction fees.

Decentralization
Blockchain does not store any of its information in a central location. Instead, the blockchain
is copied and spread across a network of computers. Whenever a new block is added to the
blockchain, every computer on the network updates its blockchain to reflect the change. By
spreading that information across a network, rather than storing it in one central database,
blockchain becomes more difficult to tamper with. If a copy of the blockchain fell into the
hands of a hacker, only a single copy of the information, rather than the entire network, would
be compromised.

Efficient Transactions
Transactions placed through a central authority can take up to a few days to settle. If you
attempt to deposit a check on Friday evening, for example, you may not actually see funds in
your account until Monday morning. Whereas financial institutions operate during business
hours, five days a week, blockchain is working 24 hours a day, seven days a week, and 365
days a year. Transactions can be completed in as little as ten minutes and can be considered
secure after just a few hours. This is particularly useful for cross-border trades, which usually
take much longer because of time-zone issues and the fact that all parties must confirm
payment processing.

Private Transactions
Many blockchain networks operate as public databases, meaning that anyone with an internet
connection can view a list of the network’s transaction history. Although users can access
details about transactions, they cannot access identifying information about the users making
those transactions. It is a common misperception that blockchain networks like bitcoin are
anonymous, when in fact they are only confidential.

That is, when a user makes public transactions, their unique code called a public key, is
recorded on the blockchain, rather than their personal information. If a person has made a
Bitcoin purchase on an exchange that requires identification then the person’s identity is still
linked to their blockchain address, but a transaction, even when tied to a person’s name, does
not reveal any personal information.

Secure Transactions
Once a transaction is recorded, its authenticity must be verified by the blockchain network.
Thousands of computers on the blockchain rush to confirm that the details of the purchase are
correct. After a computer has validated the transaction, it is added to the blockchain block.
Each block on the blockchain contains its own unique hash, along with the unique hash of the
block before it. When the information on a block is edited in any way, that block’s hashcode
changes—however, the hash code on the block after it would not. This discrepancy makes it
extremely difficult for information on the blockchain to be changed without notice.
Transparency
Most blockchains are entirely open-source software. This means that anyone and everyone
can view its code. This gives auditors the ability to review cryptocurrencies like Bitcoin for
security. This also means that there is no real authority on who controls Bitcoin’s code or how
it is edited. Because of this, anyone can suggest changes or upgrades to the system. If a
majority of the network users agree that the new version of the code with the upgrade is sound
and worthwhile then Bitcoin can be updated.

Banking the Unbanked

Perhaps the most profound facet of blockchain and Bitcoin is the ability for anyone, regardless
of ethnicity, gender, or cultural background, to use it. According to the World Bank, there are
nearly two billion adults that do not have bank accounts or any means of storing their money
or wealth.6 Nearly all of these individuals live in developing countries where the economy is
in its infancy and entirely dependent on cash.

These people often earn little money that is paid in physical cash. They then need to store this
physical cash in hidden locations in their homes or places of living leaving them subject to
robbery or unnecessary violence. Keys to a bitcoin wallet can be stored on a piece of paper, a
cheap cell phone, or even memorized if necessary. For most people, it is likely that these
options are more easily hidden than a small pile of cash under a mattress.

Blockchains of the future are also looking for solutions to not only be a unit of account for
wealth storage, but also to store medical records, property rights, and a variety of other legal
contracts.

DRAWBACKS OF BLOCKCHAINS

Technology Cost
Although blockchain can save users money on transaction fees, the technology is far from
free. The “proof of work” system that bitcoin uses to validate transactions, for example,
consumes vast amounts of computational power. In the real world, the power from the millions
of computers on the bitcoin network is close to what Denmark consumes annually.

Despite the costs of mining bitcoin, users continue to drive up their electricity bills in order to
validate transactions on the blockchain. That’s because when miners add a block to the bitcoin
blockchain, they are rewarded with enough bitcoin to make their time and energy worthwhile.
When it comes to blockchains that do not use cryptocurrency, however, miners will need to
be paid or otherwise incentivized to validate transactions.

Some solutions to these issues are beginning to arise. For example, bitcoin mining farms have
been set up to use solar power, excess natural gas from fracking sites, or power from wind
farms.

Speed and Data Inefficiency

Bitcoin is a perfect case study for the possible inefficiencies of blockchain. Bitcoin’s “proof
of work” system takes about ten minutes to add a new block to the blockchain. At that rate,
it’s estimated that the blockchain network can only manage about seven transactions per
second (TPS). Although other cryptocurrencies such as Ethereum perform better than bitcoin,
they are still limited by blockchain. Legacy brand Visa, for context, can process 24,000 TPS.
Solutions to this issue have been in development for years. There are currently blockchains
that are boasting over 30,000 transactions per second.

The other issue is that each block can only hold so much data. The block size debate has been,
and continues to be, one of the most pressing issues for the scalability of blockchains going
forward.

Illegal Activity
While confidentiality on the blockchain network protects users from hacks and preserves
privacy, it also allows for illegal trading and activity on the blockchain network. The most
cited example of blockchain being used for illicit transactions is probably the Silk Road, an
online “dark web” drug marketplace operating from February 2011 until October 2013 when
it was shut down by the FBI.7

The Dark Web allows users to buy and sell illegal goods without being tracked using the Tor
browser and make illegal purchases in Bitcoin or other cryptocurrencies. Current U.S.
regulations require financial service providers to obtain information about their customers
when they open an account, verify the identity of each customer, and confirm that customers
do not appear on any list of known or suspected terrorist organizations. This system can be
seen as both a pro and a con. It gives anyone access to financial accounts but also allows
criminals to more easily transact. Many have argued that the good uses of crypto, like banking
the unbanked world, outweigh the bad uses of cryptocurrency, especially when most illegal
activity is still accomplished through untraceable cash.

While Bitcoin had been used early on for such purposes, its transparent nature and maturity
as a financial asset has actually seen illegal activity migrate to other cryptocurrencies such as
Monero and Dash. Today, illegal activity accounts for only a very small fraction of all Bitcoin
transactions.8

Regulation
Many in the crypto space have expressed concerns about government regulation over
cryptocurrencies. While it is getting increasingly difficult and near impossible to end
something like Bitcoin as its decentralized network grows, governments could theoretically
make it illegal to own cryptocurrencies or participate in their networks.

Over time this concern has grown smaller as large companies like PayPal begin to allow the
ownership and use of cryptocurrencies on its platform.

What Is a Blockchain Platform?

A blockchain platform allows users and developers to create novel uses of an existing
blockchain infrastructure. One example is Ethereum, which has a native cryptocurrency
known as ether (ETH). But the Ethereum blockchain also allows the creation of smart
contracts and programmable tokens used in initial coin offerings (ICOs), and non-fungible
tokens (NFTs). These are all built up around the Ethereum infrastructure and secured by nodes
on the Ethereum network.
How Many Blockchains Are There?

The number of live blockchains is growing every day, and at an ever-increasing pace. As of
2021, there are more than 10,000 active cryptocurrencies based on blockchain, with several
hundred more non-cryptocurrency blockchains.9

What's the Difference Between a Private and a Public Blockchain?

A public blockchain, also known as an open or permissionless blockchain, is one where

anybody can join the network freely and establish a node. Because of its open nature, these
blockchains must be secured with cryptography and a consensus system like proof-of-work.
A private or permissioned blockchain, on the other hand, requires each node to be approved
before joining. Because nodes are considered to be trusted, the layers of security do not need
to be as robust.

Who Invented Blockchain?

Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two
mathematicians who wanted to implement a system where document timestamps could not be
tampered with. Cypherpunk Nick Szabo in the late 1990s proposed using a blockchain to
secure a digital payments system, known as BitGold (which was never implemented).

What's Next for Blockchain?

With many practical applications for the technology already being implemented and explored,
blockchain is finally making a name for itself at age twenty-seven, in no small part because
of bitcoin and cryptocurrency. As a buzzword on the tongue of every investor in the nation,
blockchain stands to make business and government operations more accurate, efficient,
secure, and cheap with fewer middlemen.

As we prepare to head into the third decade of blockchain, it’s no longer a question of "if"
legacy companies will catch on to the technology—it's a question of "when." Today, we see a
proliferation of NFTs and the tokenization of assets. The next decades will prove to be an
important period of growth for blockchains.

CRYPTOGRAPHIC HASH FUNCTION

A cryptographic hash function (CHF) is a mathematical algorithm that maps data of an

arbitrary size (often called the "message") to a bit array of a fixed size (the "hash value", "hash",
or "message digest"). It is a one-way function, that is, a function for which it is practically
infeasible to invert or reverse the computation.[

Ideally it should also have the following properties:

• it is quick to compute the hash value for any given message

• it is infeasible to generate a message that yields a given hash value (i.e. to reverse
the process that generated the given hash value)
• it is infeasible to find two different messages with the same hash value
• a small change to a message should change the hash value so extensively that a
new hash value appears uncorrelated with the old hash value
DIGITAL SIGNATURE
A digital signature is a mathematical scheme for verifying the authenticity of digital messages
or documents. A valid digital signature, where the prerequisites are satisfied, gives a recipient
very strong reason to believe that the message was created by a known sender (authenticity),
and that the message was not altered in transit (integrity).
Digital signatures are a standard element of most cryptographic protocol suites, and are
commonly used for software distribution, financial transactions, contract management
software, and in other cases where it is important to detect forgery or tampering.