The blockchain is powerful technology that enables Bitcoin, Litecoin, Dogecoin, and other virtual currencies to be open, anonymous, and secure.
The code also empowers countless innovations beyond cryptocurrency. The blockchain is a database of details about every Bitcoin transaction. Often referred to as a “public ledger,” the log contains metadata about when and how each transaction occurred. The ledger is publicly accessible through APIs and torrent sites. To prevent tampering with current and past transactions, the database is cryptographically secured. Encryption allows developers to trust the transaction history and build applications from and around transaction information.
SEE: IT leader’s guide to the blockchain (Tech Pro Research)
Because the blockchain can be confusing, TechRepublic has compiled this guide to help business technology professionals get up to speed quickly. Blockchain innovation iterates rapidly, so our “living” guide will be continuously updated to help provide the most contemporary information about the technology.
- What is the blockchain? The blockchain is a cryptographically secure index of every Bitcoin transaction. Blockchain technology is also used to enable a number of public and private virtual currencies, such as Litecoin and Ethereum.
- Why does the blockchain matter? Over time, cryptocurrencies like Bitcoin may fade in and out of fashion. The blockchain is intended to provide a tamper-proof record of transaction metadata, regardless of transaction type.
- Who does the blockchain affect? Everyone who spends money. Bitcoin evangelists argue that because blockchain-based currencies are based on code, not governments, the code is more reliable and fair than traditional monetary systems.
- When is the blockchain happening? The blockchain and Bitcoin were coded and released to the public in a white paper by mysterious developer Satoshi Nakamoto in 2008. The currency hit the mainstream in 2012 and peaked in value in 2013.
- How do I access the blockchain? The blockchain API is available at blockchain.info, and can be downloaded using Bittorrent (a similarly named but unrelated technology) on most major torrent sites.
What is the blockchain?
The blockchain is a record of every Bitcoin transaction. The name comes from the method by which Bitcoin is unlocked and available to be mined by the public. The code releases nodes in 1 MB chunks, or “blocks,” approximately every 10 minutes. Every coin, and every transaction related to each coin, is logged. Because the blockchain is available to anyone and contains metadata similar to a bank statement, the code is often referred to as a “public ledger.” The database is cryptographically secure and the chain is reliable and can be used to develop applications and protocols that require transparency and complete security.
SEE: What is blockchain? Understanding the technology and the revolution (PDF) (TechRepublic)
The primary advantage of money—like dollars, euros, and Bitcoin—is that the currency is understood by everyone, yet can be controlled by individuals or institutions. The blockchain, and Bitcoin, offers the additional benefit of transparency. Code, rather than a government, dictates the supply of Bitcoin. In the summary for his white paper Nakamoto explained:
[Bitcoin is] an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers.
Why does the blockchain matter?
Virtual currencies offer an alternative to government-issued money. These currencies are exchanged like cash for goods and services. They can also be converted easily by a number of services for traditional currency like dollars, pounds, and euros. Because transaction information is obfuscated, cryptocurrency enables legal, extralegal, and illegal behavior. Using Bitcoin, it’s easy to buy pizza, train tickets, stolen data, drugs, and weapons.
WATCH: Has Bitcoin inventor revealed his true identity? (CBS News)
The blockchain is, in theory, future-proof and can be used by private companies and individuals to build private financial networks. This means that a large enterprise could build a financial system internally for use by employees or external vendors. Though most countries require tax to be collected from income, taxing company-to-company virtual currency transactions is tricky.
Who does the blockchain affect?
Corporations, small businesses, and individuals all need to be aware of the blockchain. Because the blockchain allows financial transactions to occur anonymously, the technology has empowered the growth of questionable, sometimes illegal, behavior. In recent years ransomware has become a popular method of extorting consumers. Black markets have exploded in popularity. These markets exist on the Dark Web and allow hackers to buy and sell stolen data, zero-day exploits, drugs, weapons, and humans. The United Nations, the FBI, and other law enforcement agencies attempt to track illicit Dark Web transactions, but Bitcoin-based markets continue to flourish.
Well-funded startups also use the blockchain. Because the blockchain is data-rich, secure, and offers unprecedented transparency the code can be used as the building block (pun intended) for numerous modern, and future, technologies and startup companies. Etherium, for example, is a blockchain startup that helps enterprise companies develop private chains and private currencies. Mycelium builds physical point-of-sale systems and debit cards for cryptocurrency.
When is the blockchain happening?
The blockchain has been available since 2008 and is employed now by millions of users. The great irony of the blockchain is that while Bitcoin transactions can be anonymous, every transaction is logged and can be viewed in a simple web browser. Blockchain.info streams real-time transaction information and contains copious information about personal coin exchanges, Dark Web uses, real-estate firms, and even music streaming services that rely on the blockchain to verify media ownership rights.
How do I access the blockchain?
The most common method of accessing the blockchain is by using the API, located at https://blockchain.info/api. The API defines several types of calls, including transaction details, wallet creation, storage methods, and current Bitcoin market and trading data.