Definition of Blockchain
Blockchain has been evolving steadily since 2008 when the technology that drives it came into existence, and the first application that was tested on blockchain technology was Bitcoin; the general idea of blockchain was first introduced in the Bitcoin protocol which was published in 2008.
Some people usually assume that Bitcoin is blockchain because Bitcoin was the first application used on blockchain technology; however, Bitcoin is not blockchain: Bitcoin is an application of blockchain technology.
In 2009, Bitcoin was the first decentralized cryptocurrency produced as a result of activities on the Bitcoin blockchain which is a distributed database that records every Bitcoin transaction on a public decentralized ledger and gives incentives or tokens to users (peers) who validate transactions on the Bitcoin blockchain network by using their computer nodes.
The reason why some people mistaken Bitcoin for blockchain, and vice-versa, is likely because Bitcoin was the first and is still the most significant application of blockchain. Apart from Bitcoin, blockchain has other applications or uses.
Although blockchain was invented to produce cryptocurrency or digital money, almost every day, people have been using it for other important purposes and finding more and more issues or problems to solve by using it.
Blockchain, which began in 2008, has been existing for about 13 years and elevated the financial institution. But what is blockchain? This article defines what blockchain is through discussions on the following topics:
- Blockchain: progress beyond cloud computing
- Who invented the term “blockchain”?
- What is blockchain?
- Blockchain: a form of distributed ledger technology
Blockchain: progress beyond cloud computing
The 1st generation computer called ENIAC (Electronic Numerical Integrator and Computer) was developed in 1946; later on, in 1977, Apple II came along the way, and IBM (Intel 8088) was introduced in 1981.
About 10 years later, the internet began in 1991, and after 15 years cloud computing framework arrived in 2006 and was taking control of the client/server framework.
Cloud computing, which is a type of internet-based computing that is centralized or has a centralized authority, provides data and shared computer processing resources to computers and other types of devices; in addition, it also provides a foundation to merge software and hardware resources supplied from different regions by different groups.
Cloud computing actually reduces the cost of improved efficiency and operation; however, the centralization associated with cloud computing has its own issues such as:
- low data security.
- less assurance of complete integrity or trust in its mechanism.
- possibility for lack of data accountability.
- disconnection between server and cloud computing.
Blockchain presents a good response that can tackle issues faced by cloud computing, and its underlying technology can overcome the shortcomings of cloud computing. Simply put: blockchain makes it possible for:
- decentralization to occur and prevent centralization or extreme concentration of central power.
- data security to be heightened.
- steady network connection across all connected computers; is and always be unstoppable and fully accessible to everybody.
- high assurance of complete integrity or full transparency in decentralized mechanism or administration.
Who invented the term “blockchain”?
When the First Global Blockchain Summit was held in Shanghai in October 2015, and people (regulatory policymakers, corporate executives, entrepreneurs, investors, academic experts, and geeks) assembled and discussed opportunities and applications of blockchain technology, the first question that was asked was “who invented the term “blockchain”?
The question might have been asked because the inventor of Bitcoin, Satoshi Nakamoto, didn’t mention the word “blockchain” in his 2008 Bitcoin white paper. The term that was mentioned was “chain of blocks”, not “blockchain”.
What seemed to have happened was that through private correspondence among early Bitcoin pioneers in the Bitcoin community, the term “blockchain” slowly evolved and became widely used and accepted.
It is known that Hal Finney, who is one of the early Bitcoin pioneers, used the phrase “block chain” several times in his correspondence with Satoshi Nakamoto. The two separate words in the phrase “block chain” were later combined together to form the term or word “blockchain”.
What is blockchain?
Blockchain is a secure distributed ledger technology (DLT) that is completely decentralized, consists of a globally distributed database, is unstoppable, and runs on all computers without being administered by a central or trusted authority.
Blockchain has always been increasing in size or length as a result of multiple new blocks being constantly connected or chained to countless old blocks that are irreplaceable. Since blockchain is completely decentralized, it doesn’t have a boss or central authority, administrator, or administration; this significantly reduces the complexity and cost of financial transactions and data sharing.
Blockchain technology’s immutable chain system, in which blocks are chained or linked together, establishes a single source of truth for a total database of information in the form of ordered records of transactions.
Blockchain uses the outstanding features of distributed consensus algorithms and cryptographic techniques to maintain a synchronized ledger platform and provide a high degree of transparency and accountability from a group of users across different geographical locations in a distributed network.
Each time new blocks are created and added or linked to the existing blockchain, the blockchain network synchronizes and replicates the same information (new blocks) on all computers in the blockchain system or network which resides on the internet. Replication of information in this manner makes blockchain technology irreplaceable and highly transparent.
The Bitcoin blockchain is the first secure, open, and transparent distributed ledger technology (DLT) that doesn’t require a central or trusted authority, and provides a solution to the problem of double-spending of digital currency.
Blockchain: a form of distributed ledger technology
Blockchain is a type of distributed ledger technology driven by a peer-to-peer (P2P) network that doesn’t rely on a centralized party or group of persons to relay information to every node which communicates directly with each other in a blockchain system.
Any transaction that occurs in a blockchain system is transmitted in a peer-to-peer (P2P) manner, validated by all nodes in the system, and added to the copy of the “ledger” which is sustained or maintained by each node. Any time validation occurs, each node will be updated with the most current version or state of information that has been added to the blockchain.
However, it has to be noted that the nodes in a blockchain system might not always have the most current version or updated state at all times because the network could be congested or delayed.
On the other hand, each individual node keeps the highest scoring version it possibly can, and whenever it receives a higher scoring version, it will overwrite its own version with it and transmit or broadcast the information to its peers through other nodes. The scoring system depends on the blockchain specification.
In order for a node to successfully verify a particular transaction on a blockchain, it would simply query nearby nodes or peers for their own copies and confirm the transaction after it gets enough identical copies from other nodes (its peers).