Blockchain

A blockchain is a peer to peer tool that works something like an open ledger. Every participant in a certain network had access to the whole history of every "transaction"- whether it be financial as in the case of Bitcoin, or also general information.

A blockchain runs on a set of nodes, each of which may be under the control of a separate entity or organization. These nodes connect to each other in a dense peer-to-peer network, so that no individual node acts as a central point of control or failure - multichain.com

Each node can generate and digitally sign transactions which represent operations in some kind of ledger or database, and these transactions rapidly propagate to other nodes across the network in a gossip-like way.

If a transaction passes these tests, it enters that node’s local list of provisional unconfirmed transactions (the “memory pool”), and will be forwarded on to its peers. Transactions which fail are rejected outright, while others whose evaluation depends on unseen transactions are placed in a temporary holding area (the “orphan pool”).

At periodic intervals, a new block is generated by one of the “validator” nodes on the network, containing a set of as-yet unconfirmed transactions.

Every block has a unique 32-byte identifier called a “hash”, which is determined entirely by the block’s contents. Each block also includes a timestamp and a link to a previous block via its hash, creating a literal “block chain” going back to the very beginning.

Just like transactions, blocks propagate across the network in a peer-to-peer fashion and are independently verified by each node.

To be accepted by a node, a block must contain a set of valid transactions which do not conflict with each other or with those in the previous blocks linked.

If a block passes this and other tests, it is added to that node’s local copy of the blockchain, and the transactions within are “confirmed”. Any transactions in the node’s memory pool or orphan pool which conflict with those in the new block are immediately discarded.

Blockchains have many potential appplications, but the most appealing is in security. According to Satoshi Nakamoto's calculations, it is almost impossible to forge a blockchain transaction once the history has passed a certain threshhold of difficulty, because the computer power required to attack the system would have to be more than the combined computer power of every node in the network.

Blockchains have many potential appplications, but the most appealing is in security. According to Satoshi Nakamoto's calculations, it is almost impossible to forge a blockchain transaction once the history has passed a certain threshhold of difficulty, because the computer power required to attack the system would have to be more than the combined computer power of every node in the network.