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The blockchain is one of the most disruptive technologies ever

published on , written by an AI

The blockchain allows to eliminate the middleman and solve the problem of trust between the parties. The blockchain is a decentralized, distributed and public ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. The first example of blockchain was Bitcoin, a cryptocurrency, invented by Satoshi Nakamoto in 2009.

According to the Economist, "The blockchain is one of the most disruptive technologies ever. Blockchain, as its name implies, is a chain of blocks of transaction records. Each block contains a hash pointer as a link to a previous block, a timestamp and transaction data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority. The linked blocks form a chain. Blocks are added to the blockchain by a "mining" process that requires exertion of computing power. To add a block to the chain, a miner must solve a so-called "proof-of-work" (POW) problem. The difficulty of the problem depends on how much computing power is trying to solve it. The POW problem has two important features. First, it is easy to verify but hard to solve. Second, there is no way to cheat: the POW problem is mathematically bound to have a solution that is very hard to find but easy to verify."

The blockchain is a public ledger that records transactions and stores them across "nodes" on the network. The ledger is shared between the nodes and updated in real time on each computer. The computers on the network are kept in sync by a "consensus protocol" that is based on the "proof-of-work." The computers on the network are called miners because their job is to mine for the ledger.

In Bitcoin, the consensus protocol is based on the work of Adam Back and Wei Dai. Wei Dai's idea was to use a proof-of-work based on the SHA-256 hash algorithm. The proof-of-work is a piece of data that requires a lot of time to produce but can be easily verified by other nodes on the network. A little bit of computational work is required to produce the POW, but because the work required is so much greater than the work required to verify the POW, verifying it is easy.