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Definition: blockchain
For a comparison of the two largest blockchain networks, see Bitcoin vs. Ethereum. For other prominent blockchains, see major blockchains. For the impact blockchains are having, see crypto.
A Chain of Blocks
Public vs. Private Blockchains
A public blockchain like Bitcoin and Ethereum means anyone can participate. A private blockchain is run by a consortium and participants are selected. See private blockchain and consensus mechanism.
Why a Blockchain?
Because all data in a computer are only bits and bytes, they can be changed by anyone with access to the file. Even encrypted data can be altered if the key that scrambled the data is exposed. However, because blockchain transactions are linked together, a change to existing data breaks a link and signals a discrepancy.
Too Many Names Already
Thousands of Copies
Blockchains run in computers around the globe; however, their distributed architecture allows them to operate like a single computer with no downtime. The more participating, the better. For example, Bitcoin runs in thousands of computers, and each node has the entire blockchain or an abbreviated version for quicker verification. See blockchain sharding.
Advantage and Disadvantage
A blockchain provides a verifiable list of ownership. It certifies not only money balances but digital art, contracts and titles. The irreversible data guarantee is a primary feature along with the goal of creating a trusted financial network without a centralized middleman. However, the ever-increasing variations and complexity of blockchains makes cherry picking for hackers.
Ethereum - General-Purpose Smart Contracts
Bitcoin is cash, but Ethereum's programmable "smart contracts" are responsible for a whole new world of "decentralized finance" (see DeFi). See Ethereum, smart contract and NFT.
Volunteer or For Profit
Depending on the type of blockchain, it is continuously maintained by invested parties who are either volunteers or in the game for profit. For example, Bitcoin and Ethereum have different approaches. Bitcoin separates volunteers (validators) from profit seekers (miners), whereas Ethereum distributes profits randomly (see Bitcoin and Ethereum). See crypto mining, major blockchains, public key cryptography and crypto glossary.
The Internet Is the Data Transport
Popular Blockchains
Hashing Maintains a Blockchain's Integrity
Fingerprints Are Created by Hashing
Crypto transactions are recorded in a database known as a "digital ledger." The ledger is constructed of "blocks" linked together in a chainlike fashion. The "block hashes" are digital fingerprints that link the blocks together. If a block is altered, it can be detected because the linkage is broken (more details below).
Public vs. Private Blockchains
A public blockchain like Bitcoin and Ethereum means anyone can participate. A private blockchain is run by a consortium and participants are selected. See private blockchain and consensus mechanism.
Why a Blockchain?
Because all data in a computer are only bits and bytes, they can be changed by anyone with access to the file. Even encrypted data can be altered if the key that scrambled the data is exposed. However, because blockchain transactions are linked together, a change to existing data breaks a link and signals a discrepancy.
Any noun (black) and adjective (green) above can correctly describe a blockchain. It is a ledger duplicated across a network. Tech guru David Pogue says "a blockchain is a tamperproof database."
Thousands of Copies
Blockchains run in computers around the globe; however, their distributed architecture allows them to operate like a single computer with no downtime. The more participating, the better. For example, Bitcoin runs in thousands of computers, and each node has the entire blockchain or an abbreviated version for quicker verification. See blockchain sharding.
Advantage and Disadvantage
A blockchain provides a verifiable list of ownership. It certifies not only money balances but digital art, contracts and titles. The irreversible data guarantee is a primary feature along with the goal of creating a trusted financial network without a centralized middleman. However, the ever-increasing variations and complexity of blockchains makes cherry picking for hackers.
Ethereum - General-Purpose Smart Contracts
Bitcoin is cash, but Ethereum's programmable "smart contracts" are responsible for a whole new world of "decentralized finance" (see DeFi). See Ethereum, smart contract and NFT.
Volunteer or For Profit
Depending on the type of blockchain, it is continuously maintained by invested parties who are either volunteers or in the game for profit. For example, Bitcoin and Ethereum have different approaches. Bitcoin separates volunteers (validators) from profit seekers (miners), whereas Ethereum distributes profits randomly (see Bitcoin and Ethereum). See crypto mining, major blockchains, public key cryptography and crypto glossary.
Every transaction between blockchains, crypto exchanges and users' wallets is transmitted by the same TCP/IP protocol as email, Web pages and all other Internet activity. Blockchain nodes are either regular computers or specialized hardware, all interacting with each other. Complex logic is used that seeks majority agreement from all nodes (see consensus mechanism). See Internet protocol.
Each circle above represents a blockchain network that contains from a dozen to thousands of nodes. There are many more blockchains than these examples, and new ones are coming online all the time. See Bitcoin vs. Ethereum, major blockchains, public blockchain, private blockchain and smart contract.
Blocks of transactions are "chained" together by creating a fingerprint of each block and storing it in the header of the next block. If a transaction were maliciously altered, validating nodes constantly recomputing this linkage would detect a break in the chain. See Merkle tree, mining node and crypto mining.
The fingerprints are created by passing the data through a hash algorithm, which creates a hash value of the same size no matter the size of the input. For example, SHA-256 always generates a 256-bit hash, and hashing is a one-way street. It is impossible to turn the hash back into the original data using traditional computers (see quantum secure). See Merkle tree and cryptographic hash function.
To explore the variety of topics in this reference, see What's in this encyclopedia.