WHAT IS BLOCKCHAIN?

BBC Earth (Asia) - - Science -

At the heart of cryp­tocur­ren­cies like Bit­coin is the elec­tronic ledger, or blockchain, which keeps a per­ma­nent and un­al­ter­able record of ev­ery trans­ac­tion ever made. It’s this that pre­vents peo­ple cre­at­ing coun­ter­feit Bit­coins. The where­abouts of ev­ery gen­uine trans­ac­tion is up­dated on the blockchain, along with a ver­sion of the same in­for­ma­tion that’s been math­e­mat­i­cally trans­formed – ‘hashed’ – in a way that pro­duces a rad­i­cally dif­fer­ent out­come if the in­for­ma­tion is tam­pered with. Any at­tempt to amend a trans­ac­tion will pro­duce a mis­match that’s in­stantly spot­ted. For added se­cu­rity, the hashed ver­sion of each trans­ac­tion also de­pends on parts of the pre­vi­ous trans­ac­tion, plus some ex­tra in­gre­di­ents.

Main­tain­ing the blockchain is the job of so-called ‘min­ers’, who gen­er­ate the hashed in­for­ma­tion us­ing com­put­ers and are re­warded for their work with newly minted Bit­coins. It’s get­ting to be a tougher job, as the process of up­dat­ing the ever-grow­ing blockchain gets more de­mand­ing. While once the task could be com­pleted us­ing a home com­puter, it now re­quires vast pro­ces­sor farms.

This was all en­vis­aged by Satoshi Nakamoto, the orig­i­na­tor of Bit­coins. He wanted to limit their to­tal num­ber to around 21 mil­lion, so that they would keep their value over time. That tar­get should be reached by 2140.

What he may not have fore­seen were the myr­iad other uses of the blockchain idea in cre­at­ing trusted records. Tra­di­tional banks are in­ves­ti­gat­ing its use for ver­i­fy­ing elec­tronic trans­ac­tions, while hos­pi­tals and en­ergy com­pa­nies are eye­ing its use for pa­tient and cus­tomer data­bases.

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