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Definition: blockchain


An architecture that validates the integrity of digital data. A blockchain ensures that any alteration to a stored transaction is quickly detected. Because all data in a computer are nothing more than a collection of bits and bytes, they can be changed by anyone who can access the digital file. Even encrypted data can be altered if the private key is exposed. However, all transactions in a blockchain are "linked" together (see illustration below), and a change to any existing transaction breaks a link in the chain. Blockchains are continuously verified from the very first transaction to the last by third parties, and any broken link is identified right away.

For Bitcoin and Other Data
Blockchain is the underlying architecture of Bitcoin, which is why blockchain is always mentioned in Bitcoin articles. However, blockchains are used for other cryptocurrencies, and because it provides a verifiable list of ownership, it is also used for contracts, fundraising and the recording of legal documents. Both the public and private sectors are using or are exploring blockchain technologies for various purposes. The incentive is undeniable proof of digital authenticity. See Ethereum.

A Type of Distributed Ledger
A blockchain is replicated on many computers (hundreds or thousands depending on the system). It is continuously maintained by invested parties, which may perform only verification or be in the business of recording the transactions to obtain fees. Using Bitcoin again as an example, blocks of transactions are created when parties exchange coins, one block approximately every 10 minutes. Only Bitcoin owners can transfer their coins but sender and receiver data are encrypted and cannot be identified. Only dates and transaction amounts are public. See Bitcoin, Bitcoin mining, public key cryptography, ICO, distributed ledger and cryptocurrency.




A Blockchain Is One-Way Linkage
Blocks are chained together by storing the hash of the header of the previous block. If a transaction within a block were altered, the link to the subsequent block would be broken. The Merkle root is a hashed summary of transactions within the block (see Merkle tree). See cryptographic hash function.