Blockchain – 1
In the past few years, interest in crypto-currencies has skyrocketed. As per CoinMarketCap, over 9000 currencies are now valued at $2 trillion. Just five years ago, this was at just $10 billion. While the currencies are many (bitcoin and ether being the most prominent), the underlying technology is similar in all cases: the blockchain.
Wikipedia explains: “A blockchain is a growing list of records, called blocks, that are linked together using cryptography. It’s also described as a “trustless and fully decentralized peer-to-peer immutable data storage” that is spread over a network of participants often referred to as nodes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree). The timestamp proves that the transaction data existed when the block was published in order to get into its hash. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains are resistant to modification of their data because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks. Blockchains are typically managed by a peer-to-peer network for use as a publicly distributed ledger, where nodes collectively adhere to a protocol to communicate and validate new blocks.”
Tyler Cowen: “Centralized services typically are run by companies or institutions, such as Facebook, Twitter or Amazon. There is a command structure and a boss, and changes can be made by deliberate decision. In this parlance, even Wikipedia counts as centralized, though the editors and contributors are scattered around the world. Decentralized services are harder to define, but two simple examples may be helpful. The first is email, which consists of networks of rules and interconnections not owned by any one company or institution, even though your email provider might be. The second is the World Wide Web itself, a series of protocols with a huge amount of stuff built on top of it. Bitcoin also operates in a decentralized way, unless a majority of the blockchain miners decide otherwise, which is very difficult to pull off.”
Investopedia adds: “One key difference between a typical database and a blockchain is the way the data is structured. A blockchain collects information together in groups, also known as blocks, that hold sets of information. Blocks have certain storage capacities and, when filled, are chained onto 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…In a blockchain, each node has a full record of the data that has been stored on the blockchain since its inception. For Bitcoin, the data is the entire history of all Bitcoin transactions. If one node has an error in its data it can use the thousands of other nodes as a reference point to correct itself. This way, no one node within the network can alter information held within it. Because of this, the history of transactions in each block that make up Bitcoin’s blockchain is irreversible.”
