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A blockchain[1] [2] [3] originally block chain[4] [5] is a continuously growing list of recordscalled blockswhich are linked and secured using cryptography. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

Blockchains are secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain. Blockchain was invented by Blockchain technical details Nakamoto in for use in the cryptocurrency bitcoinas its public transaction ledger. The bitcoin design has been the inspiration for other applications.

The first work on a cryptographically secured chain of blocks was described in by Stuart Haber and W. The first blockchain was conceptualized by a person or group of people known as Satoshi Nakamoto in It was implemented the following year by Nakamoto as a core component of the cryptocurrency bitcoinwhere it serves as the public ledger for all transactions on the network.

The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as a single word, blockchain, by The term blockchain 2. Second-generation blockchain technology makes it possible to store an individual's "persistent digital ID and persona" and provides an avenue to help solve the problem of social inequality by "potentially changing the way wealth is distributed". Inthe central securities depository of the Russian Federation NSD announced a pilot project, based on the Nxt blockchain 2.

A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and blockchain technical details collusion of the network. They are authenticated by mass collaboration powered by collective self-interests.

The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset. It confirms that blockchain technical details unit of value was transferred only once, solving the long-standing problem of double spending.

Blockchains have been described as a value -exchange protocol. Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree. The linked blocks form a chain.

Sometimes separate blocks blockchain technical details be produced concurrently, creating a temporary fork. In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of the history so that one with a higher value can be selected over others. Blocks not selected for inclusion in the chain are called orphan blocks.

They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version usually the old version blockchain technical details a single new block added they extend or overwrite their own database and retransmit the improvement to their peers. There blockchain technical details never an absolute guarantee that any particular entry will remain in the best version of the history forever. Because blockchains are typically built to add blockchain technical details score of new blocks onto old blocks and because there are incentives to work only on extending with new blocks rather than overwriting old blocks, the probability of an entry becoming superseded goes down exponentially [34] as more blocks are built on top of it, eventually becoming very low.

There are a number of methods that can be used to demonstrate a sufficient level of computation. Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner.

The block time is the average time it takes for the network to generate one extra block in the blockchain. In cryptocurrencythis is practically when the money transaction takes place, so a shorter block time means faster transactions.

The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it is 10 minutes. A hard fork is a rule change such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid. In case of blockchain technical details hard fork, all nodes meant to work in accordance with the new rules need to blockchain technical details their software.

If one group of nodes continues to use the old software while the blockchain technical details nodes use the new software, a split can occur. For example, Ethereum has hard-forked to "make whole" the investors in The DAOwhich had been hacked by exploiting a vulnerability in its code.

In the Nxt community was asked to consider a hard fork that would have led to a blockchain technical details of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment. Alternatively, to prevent a permanent split, a majority of nodes using the new blockchain technical details may return to the old rules, as was the case of bitcoin split on 12 March By storing data across its peer-to-peer network, the blockchain eliminates a number of risks that come with data being held centrally.

Peer-to-peer blockchain networks lack centralized points of vulnerability that computer crackers can exploit; likewise, it has no central point of failure. Blockchain security methods include the use of public-key cryptography.

Value tokens blockchain technical details across the network are recorded as blockchain technical details to that address. A private key is like a password blockchain technical details gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support.

Data stored on the blockchain is generally considered incorruptible. While centralized data is more easily controlled, information and data manipulation are possible. By decentralizing data on an accessible ledger, public blockchains make block-level blockchain technical details transparent to everyone involved.

Every node in a decentralized system blockchain technical details a copy of the blockchain. Data quality is maintained by massive database replication [9] and computational trust. No centralized "official" copy blockchain technical details and no user is "trusted" more than any other.

Messages are delivered blockchain technical details a best-effort basis. Mining nodes validate transactions, [33] add blockchain technical details to the block they are building, and then broadcast the completed block to other nodes.

Open blockchains are more user-friendly than some traditional ownership records, which, while open to the public, still require physical access to view. Because all early blockchains were permissionless, controversy has arisen over the blockchain definition. An issue in this ongoing debate is whether a private system with verifiers tasked and authorized permissioned by a central authority should be considered a blockchain.

These blockchains serve as a distributed version of multiversion concurrency control MVCC in databases. The great advantage to an open, permissionless, or public, blockchain network is that guarding against bad actors is not required and no access control is needed.

Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include a proof of work.

To prolong the blockchain, bitcoin uses Hashcash puzzles. Financial companies have not prioritised decentralized blockchains.

Permissioned blockchains use an access control layer to govern who has blockchain technical details to the network. They do not rely on anonymous nodes to validate transactions nor do they benefit from the network effect. The New York Times noted in both and that many corporations are using blockchain networks "with private blockchains, independent of the public system. Nikolai Hampton pointed out in Computerworld that "There is also no need for a '51 percent' attack on a private blockchain, as the private blockchain most likely already blockchain technical details percent of all block creation resources.

If you could attack or damage the blockchain creation tools on a private corporate server, blockchain technical details could effectively control percent of their network and alter transactions however you wished.

It's unlikely that any private blockchain blockchain technical details try to protect records using gigawatts of computing power—it's time consuming blockchain technical details expensive.

This means that blockchain technical details in-house blockchain solutions will be nothing more than cumbersome databases. Data interchange between participants in a blockchain is a technical challenge that could inhibit blockchain's adoption and use. This has not yet become an issue because thus far participants in a blockchain have agreed either tacitly or actively on metadata standards.

Standardized metadata will be the best approach for permissioned blockchains such as payments and securities trading with high transaction volumes and a limited number of participants. Such standards reduce blockchain technical details transaction overhead for the blockchain without imposing burdensome mapping and translation requirements on the participants.

However, Robert Kugel of Ventana Research points out that general purpose commercial blockchains require a system of self-describing data to permit automated data interchange. According to Kugel, by enabling universal data interchange, self-describing data can greatly expand the number of participants in permissioned commercial blockchains without having to concentrate control of these blockchains to a limited number of blockchain technical details. Self-describing data also facilitates the integration of data between disparate blockchains.

Blockchain blockchain technical details can be integrated into multiple areas. The primary use of blockchains today is as a distributed ledger for cryptocurrenciesmost blockchain technical details bitcoin. Blockchain technology has a large potential to transform business operating models in the long term. Blockchain distributed ledger technology is more a foundational technology —with the potential to create new foundations for global economic and social systems—than a disruptive technologywhich typically "attack a traditional business model with a lower-cost solution and overtake incumbent blockchain technical details quickly".

As of [update]some observers remain blockchain technical details. Steve Wilson, of Constellation Research, believes the technology has been hyped with unrealistic claims.

This means specific blockchain applications may be a disruptive innovation, because blockchain technical details lower-cost solutions can blockchain technical details instantiated, which can disrupt existing business models. Blockchains alleviate the need for a trust service provider and are predicted to result in less blockchain technical details being tied up in disputes.

Blockchains have the potential to reduce systemic risk and financial fraud. They automate processes that were previously blockchain technical details and done manually, such as the incorporation of businesses. As a distributed ledger, blockchain reduces the costs involved in verifying transactions, and by removing the need for trusted "third-parties" such as banks to complete transactions, the technology also lowers the cost of networking, therefore allowing several applications.

Starting with a strong focus on financial applications, blockchain technology is extending to activities including decentralized applications and collaborative organizations that eliminate blockchain technical details middleman. Frameworks and trials such as the one at the Sweden Land Registry aim to demonstrate the effectiveness of the blockchain at speeding land sale deals. The Government of India is fighting land fraud with the help of a blockchain. In Octoberone of the first international property transactions was completed successfully using a blockchain-based smart contract.

Each of the Big Four accounting firms is testing blockchain technologies in various formats. It is important to us that everybody gets on board and prepares themselves for the revolution set to take place in the business world through blockchains, [to] smart contracts and digital currencies.

Blockchain-based smart contracts are contracts that can be partially or fully executed or enforced without human interaction. The IMF believes blockchain technical details contracts based on blockchain technology could reduce moral hazards and optimize the use of contracts in general. Some blockchain implementations could enable the coding of contracts that will execute when specified conditions are met. A blockchain blockchain technical details contract would be enabled blockchain technical details extensible programming instructions that define and execute an agreement.

Companies have supposedly been suggesting blockchain-based currency solutions in the following two countries:. Some countries, especially Australia, are providing keynote participation in identifying the various technical issues associated with developing, governing and using blockchains:. Don Tapscott conducted a two-year research project exploring how blockchain technology can securely move and store host "money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes".

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As a new user, you can get started with Bitcoin without understanding the technical details. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one.

You can disclose your addresses to your friends so that they can pay you or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin addresses should only be used once. The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender.

The integrity and the chronological order of the block chain are enforced with cryptography. A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining. Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain.

It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network. These rules prevent previous blocks from being modified because doing so would invalidate all following blocks.

Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends. This is only a very short and concise summary of the system. If you want to get into the details, you can read the original paper that describes the system's design, read the developer documentation , and explore the Bitcoin wiki.

How does Bitcoin work? This is a question that often causes confusion. Here's a quick explanation! The basics for a new user As a new user, you can get started with Bitcoin without understanding the technical details. Balances - block chain The block chain is a shared public ledger on which the entire Bitcoin network relies. Transactions - private keys A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain.

Processing - mining Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. Going down the rabbit hole This is only a very short and concise summary of the system.