What is it?
A public¹, permanent², append-only³ distributed⁴ ledger⁵.
- Though some blockchains require permission to access, “open” blockchains like those underlying Bitcoin and Ethereum are accessible to anyone, meaning the database is public information
- It’s next to impossible for bad actors to tamper with data encoded in a blockchain, if it’s properly set up.
- Old transactions can’t be changed in a properly functioning blockchain; only new ones can be added.
- No single entity owns or controls a public blockchain. A network of computers maintains and secures the database, and each participant, or “node,” stores a copy.
- The original blockchain, Bitcoin, is a ledger for tracking currency balances. But the same basic method can work for all kinds of digital assets.
A mathematical structure for storing data in a way that is nearly impossible to fake. It can be used for all kinds of valuable data.
Where did it come from?
“I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” These are the words of Satoshi Nakamoto, the mysterious creator of Bitcoin, in a message sent to a cryptography-focused mailing list in October 2008. Included was a link to a nine-page white paper describing a technology that some are now convinced will disrupt the financial system.
What is blockchain for?
It’s a new way of answering an old question: how can we create enough trust between one another to peacefully exchange something of value?
Enforcement — Early civilizations used threat of force as retribution for dealing in bad faith when engaging in trade.
Institutions — The emergence of governments and banks provided organized, central authorities to which we could outsource trust — as long as we trusted them.
The Network — Blockchains distributed across thousands of computers can mechanize trust, opening the door to new ways of organizing “decentralized” enterprises and…