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Expanded definition and overview (#20115)

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Elaborated on the data structure that is block chain, also added some information around a popular blockchain implementation called bitcoin
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tibble49
2018-10-28 12:34:16 -04:00
committed by Christopher McCormack
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guide/english/blockchain/index.md
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@ -9,6 +9,8 @@ title: Blockchain
Blockchain is often associated with Bitcoin and other cryptocurrencies, but they are not the same thing. Bitcoin was the first to implement the concept of the Blockchain. The structure of a blockchain, a growing list of records, can be applied to many other fields such as digital identity, supply chain and even [democracy](https://www.democracy.earth/).
A blockchain is built out of a combination of two different “hash-based data structures” (Narayanan, Bonneau, Felten, Miller, & Goldfeder, 2016, p. 64), a hash chain of blocks and a Merkle tree. “In short, the blockchain is a network and a database; it has rules and built-in security; and it maintains internal integrity and its own history” (Depository Trust and Clearing Corporation, 2016, p. 7). In the chain, each block has a pointer to the previous block as well as a pointer to its Merkle tree of transactions. A Merkle tree, sometimes called a hash tree, is a type of tree where each node that has at least one child is marked with a hash of its own children.
Even though blockchain can be applied to a big range of problems, it is not the solution to everything. This technology is usually used to solve problems where the parties don't trust each other.
A third party is usually needed to validate trust relationships. In the most common example, which is the banking system, a trusted authority is needed, such as a bank, to intermediate transactions, manage accounts, verify balances, and validate transfers. Blockchain then, comes in this case to replace the regulatory authority. In the case of cryptocurrencies, it replaces the figure of the bank, doing all the validations and guaranteeing the security and veracity in the transactions.
@ -26,8 +28,15 @@ The words block and chain were used separately in Satoshi Nakamoto's original pa
As of 2016, blockchain 2.0 implementations continue to require an off-chain oracle to access any "external data or events based on time or market conditions to interact with the blockchain."
### Bitcoin
Bitcoin’s main problem to solve was to achieve distributed consensus while remaining a decentralized system. Distributed consensus is essentially the idea that all the nodes that make up the network must come to a collective agreement without the use of a centralized control. In Bitcoin, the nodes are agreeing on exactly which transactions present on the network are valid. This is difficult in many ways, one of which is the potential for n number of nodes to be malicious and not want to follow
the consensus of the other nodes. Bitcoin has the benefit of being able to incentivize its nodes to “follow the rules” through rewards and transaction fees because it is a currency system.
#### Sources
1. [Bettina Warburg, "How the blockchain will radically transform the economy", *TED Talks*, December 8, 2016](https://youtu.be/RplnSVTzvnU?t=213)
2. [Depository Trust and Clearing Corporation, "Embracing Disruption: Tapping the Potential of Distributed Ledgers to Improve the Post-Trade Landscape", DTCC, 2016]
(https://hub.digitalasset.com/hubfs/Industry%20Reports/dtcc-embracing-disruption.pdf?t=1539879453546)
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