Introduction of Blockchain

“Blockchain is more than just ICT innovation, but facilitates new types of economic organization and governance. Suggests two approaches to economics of blockchain: innovation-centred and governance-centred. Argues that the governance approach—based in new institutional economics and public choice economics—is most promising, because it models blockchain as a new technology for creating spontaneous organizations, ie new types of economies.”

– Primavera De Fillippi, Academic, researcher, author and thought leader

Sometimes people consider bitcoin and blockchain as one but the bitcoins are digital crypto-currency and blockchain are the technology that enables digital currency from one individual to another. Blockchains solves the problem in money transfer. Today if a person wants to transfer his or her money to another person then it is done through a third trusted party which takes time and fees for the transferring money.

The blockchain was conceptualized by Satoshi Nakamoto in 2008 and implemented as a core component of bitcoin but now it is also used for other crypto-currency, online signature services and many other applications.

Blockchain is a peer to peer technology that protects the integrity of a digital piece of information. It is a form of distributed public ledger or database that maintains a list of blocks. Each block contains a hash(A hash algorithm turns an arbitrarily-large amount of data into a fixed-length hash) of previous block hence creates a chronological order. Every node gets a copy of the ledger and each time any transaction occurs it is broadcast over the blockchain network. Whenever any node connects with the network it gets automatically downloaded.

Blockchain has two main concepts:

• Distributed Network

• Shared Ledger

Distributed Network

• A decentralized peer-to-peer architecture

• Every node in decentralized system has a copy of the blockchain.

Shared Legder

• Database shared across network.

• It is open for public.

• Secure as it is public.

There are also few problems with blockchain like storage and synchronization, everytime a new block appends into blockchain very quickly but on the other hand it also has various advantages like faster transaction, transparency, lower transaction cost and much more.

Image Source: Inside Bitcoins