What is Blockchain?
Blockchain is a digital ledger that chronologically and publically records peer-to-peer transactions executed with cryptocurrency. Many people often associate blockchain with Bitcoin, but regardless of what kind of cryptocurrency is exchanged, blockchain is the technology that enables distributed, secure, and consistent electronic records to be made of those transactions.
As a completely automated and decentralized record-keeper, blockchain is changing the nature of transactions by removing the traditional need for a middleman.
Skratch transactions involve the exchange of Skratch tokens, a new kind of cryptocurrency that allows users to buy and sell music through a unique peer-to-peer marketplace. In this article, we’ll outline a few of the most important things you need to understand about blockchain.
Key Properties of Blockchain
Blockchain solves a key challenge of digital transaction: controlling the information about the transaction. Some key characteristics include:
Blockchain offers a database that is unchangeable and irreversible, which enables “trustless transactions.” This means that even the operators of the database itself cannot tamper with or alter records after they have been validated.
Block data is automatically saved on servers, or nodes, and information about transactions are instantly visible to the entire network as soon as a transaction is confirmed. Much like Google Docs enable instant collaboration with real-time visibility of one single “source of truth,” a blockchain ensures that only one record exists of each transaction, and each block.
The distributed nature of blockchains creates a nearly fail-proof system, allowing no single point of failure. Altering any unit within a blockchain would involve a huge undertaking to override the entire network.
Contracts for blockchains are built on a peer-to-peer basis and set conditions to validate that a transaction has been completed (ensuring all conditions have been met). Once a transaction has been confirmed, the data is recorded in the blockchain.
No single authority is required to approve transactions or set rules of engagement. Once a user has downloaded the software, they are free to send or receive currencies.
Components of a Blockchain
When transactions occur, “smart contracts” confirm execution of the transaction. This allows logic to be programmed directly on the blockchain technology, which automatically records the transaction.
- a. Consensus Identifier, aka “hash” (Proof of Work or Proof of Stake): Measures by which nodes can validate a transaction
- b. Hash from the previous block: Determines the chronological order for the new block in the ledger
- c. Transactions included: May be one, or many (thousands, even)
- d. Public key, aka identities: Allows sender and receiver to refer to the exchange
Who Uses Blockchain
Initially started in 2008 for the exchange of Bitcoin, blockchain was initially of interest to the finance market as a means to make transactions more efficient. As people have become more familiar with the concept of cryptocurrencies, however, there are even more possibilities for using blockchain in the mainstream. Everything from music to fashion are fair game for using this open-source technology.
Skratch tokens will allow users across the global music economy to securely and directly transact with each other across message boards, forums, and more.
Ready to learn how Skratch tokens work? Read on.
This is meant to be a high-level overview of blockchain technology, and is by no means comprehensive. We would recommend checking out the Blockgeeks or Coindesk sites to get a more in-depth look at what blockchain is all about.