Explain blockchain wiki

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A blockchainexplain blockchain wiki [2] [3] originally block chain[4] [5] is a continuously growing list of recordscalled blockswhich are linked and secured using cryptography. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way". Once recorded, the data in any given block cannot be altered retroactively without the alteration of explain blockchain wiki subsequent blocks, which requires collusion of the network majority.

Blockchains are secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been achieved with a blockchain. Blockchain was invented by Satoshi Nakamoto in for use in the cryptocurrency bitcoinas its public transaction ledger.

The bitcoin design has been the inspiration for other applications. The first explain blockchain wiki on a cryptographically explain blockchain wiki chain of blocks was described in by Stuart Haber and W. The first blockchain was conceptualized by a person or group of people known as Satoshi Nakamoto in It was implemented the following year by Nakamoto as a core component of the cryptocurrency bitcoin, where it serves as the public ledger for all transactions on the network.

The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as a single word, blockchain, by The term blockchain 2. Second-generation blockchain technology makes it possible to store an individual's "persistent digital ID and persona" and provides an avenue to help solve the problem of social inequality by "potentially changing the way wealth is distributed". Inthe central securities depository of the Russian Federation NSD announced a pilot project, based on the Nxt blockchain 2.

A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that explain blockchain wiki record cannot be altered retroactively without the explain blockchain wiki of all subsequent blocks and the collusion of the network.

They are authenticated by mass collaboration powered by collective self-interests. The use of a explain blockchain wiki removes the characteristic of infinite reproducibility from a digital asset. Explain blockchain wiki confirms that each unit of value was transferred only once, solving the long-standing problem of double spending.

Blockchains have been described as a explain blockchain wiki -exchange protocol. Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree. The linked blocks form a chain. Sometimes separate blocks can be produced concurrently, creating a temporary fork. In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of the history so that one with a higher value can be selected over others.

Blocks not selected for inclusion in the chain are called orphan blocks. They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version usually the old version with a single new block added they extend or overwrite their own database and retransmit the improvement to their peers.

There is never an absolute guarantee that any particular entry will remain in the best version of the history forever. Because blockchains are typically built to add the score of new blocks onto old blocks and explain blockchain wiki there are incentives to work only on extending with new blocks rather than overwriting old blocks, the probability of an entry becoming superseded goes down exponentially [34] as more blocks are built on top of it, eventually becoming very low.

There are a number of methods that can be used to demonstrate a sufficient level of computation. Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner. Explain blockchain wiki block time explain blockchain wiki the average time it takes for the network to generate one extra block in the blockchain.

In cryptocurrency, explain blockchain wiki is practically when the money transaction takes place, explain blockchain wiki a shorter block time means faster transactions. The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it explain blockchain wiki 10 minutes. A hard fork is a rule change such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid.

In case of a hard fork, all nodes meant to work in accordance with the new rules need explain blockchain wiki upgrade their software. If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur.

For example, Ethereum has hard-forked to "make whole" the investors in The DAOwhich had been hacked by exploiting a vulnerability in its code. In the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from explain blockchain wiki major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment.

Alternatively, to prevent a permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March By storing data across its peer-to-peer network, explain blockchain wiki blockchain eliminates a number of risks that come with data being held centrally. Peer-to-peer blockchain networks lack centralized points of vulnerability that computer crackers can exploit; likewise, it has no central point of failure.

Blockchain security methods include the use of public-key cryptography. Value tokens sent across the network are recorded as belonging to that address.

A private key is like a password that gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support.

Data stored on the blockchain is generally considered incorruptible. While centralized data is more easily controlled, information and data manipulation are possible. By decentralizing data on an accessible ledger, public blockchains make block-level data transparent explain blockchain wiki everyone involved. Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication [9] and computational trust. No centralized "official" copy exists and no user is "trusted" more than any other.

Messages are delivered on a best-effort basis. Mining nodes validate transactions, [33] add them to the block they are building, and then broadcast the completed block to other nodes. Open blockchains are more user-friendly than some traditional ownership records, which, while open to explain blockchain wiki public, still require physical access to view.

Because all early blockchains were permissionless, controversy has arisen over the blockchain definition. An issue in this ongoing debate is whether a private system with verifiers tasked and authorized permissioned by a central authority should be considered a blockchain. These blockchains serve as a distributed version of multiversion concurrency control MVCC in databases. The great advantage to an open, permissionless, or public, blockchain network is that guarding against bad actors is not explain blockchain wiki and no access control is needed.

Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include a proof of work. To prolong the blockchain, bitcoin uses Hashcash puzzles. Financial companies have not prioritised explain blockchain wiki blockchains. Permissioned blockchains explain blockchain wiki an access control layer to govern who has access to the network.

They do not rely on anonymous nodes to explain blockchain wiki transactions nor do they benefit from the network effect. The New York Times noted in both and that many corporations are using blockchain networks "with private blockchains, independent of the public system.

Nikolai Hampton pointed explain blockchain wiki in Computerworld that "There is also no need for a '51 percent' attack on a private blockchain, as the private blockchain most likely already controls percent of all block creation resources.

If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control percent of their network and alter transactions however you wished. It's unlikely that any private blockchain will try to protect records using gigawatts of computing power—it's time consuming and expensive. This means that many in-house explain blockchain wiki solutions will be nothing more than cumbersome databases. Data interchange between participants in a blockchain is a technical challenge that could inhibit blockchain's adoption and use.

This has not yet become an issue because thus far participants in a explain blockchain wiki have agreed either tacitly or actively on metadata standards. Standardized metadata will be the best approach for permissioned blockchains such as payments and securities trading with high transaction volumes and a limited number of participants.

Such standards reduce the transaction overhead for the blockchain without imposing burdensome mapping and translation requirements on the participants. However, Robert Kugel of Ventana Research points out that general purpose commercial blockchains require a system of self-describing data to permit automated data interchange. According to Kugel, by enabling universal data interchange, self-describing data can greatly expand the number of participants explain blockchain wiki permissioned commercial blockchains without having to concentrate control of these blockchains to a limited number of behemoths.

Self-describing data also facilitates the integration of data between disparate blockchains. Blockchain technology can be integrated into multiple areas.

The primary use explain blockchain wiki blockchains today is as a distributed ledger for cryptocurrencies, most notably bitcoin. Blockchain technology has a large potential to transform business operating models in the long term.

Blockchain distributed ledger explain blockchain wiki is more a foundational technology —with the potential to create new foundations for global economic and social systems—than a disruptive technologywhich typically "attack a traditional business model with a lower-cost explain blockchain wiki and overtake incumbent firms quickly". As of [update]some observers remain skeptical. Steve Wilson, of Constellation Research, explain blockchain wiki the technology has been hyped with unrealistic claims.

This means specific blockchain applications may be a disruptive innovation, because substantially lower-cost solutions can be instantiated, which can disrupt existing business models.

Blockchains alleviate the need for a trust service provider and are predicted to result in less capital being tied up in disputes. Blockchains have the potential to reduce systemic risk and financial fraud. They automate processes that were previously time-consuming and done manually, such as the incorporation of businesses.

As a distributed ledger, blockchain reduces the costs involved in verifying transactions, and by removing the need for trusted "third-parties" such as banks to complete transactions, the technology also lowers the cost of networking, therefore allowing several applications. Starting with a strong focus on financial applications, blockchain technology is explain blockchain wiki to activities including decentralized applications explain blockchain wiki collaborative organizations that eliminate a middleman.

Frameworks and trials such as the one at the Sweden Land Registry aim to demonstrate the effectiveness of the blockchain at speeding land sale deals.

The Government of India is fighting land fraud with the help of a blockchain. In Octoberexplain blockchain wiki of the first international property transactions was completed successfully using a blockchain-based smart contract. Each of the Big Four accounting firms is testing blockchain technologies in various formats. It is important to us that everybody gets on board and prepares themselves for the revolution set to take place in the business world through blockchains, [to] smart contracts and digital currencies.

Blockchain-based smart contracts are contracts that can be partially or fully executed or enforced without human explain blockchain wiki.

The IMF believes smart contracts based on blockchain technology could reduce moral hazards and optimize the use of contracts in general. Some blockchain implementations could enable the coding of contracts that will execute when specified conditions are met. A blockchain smart contract would be enabled by extensible programming instructions that define and execute explain blockchain wiki agreement. Companies have supposedly been suggesting blockchain-based currency solutions in the following two countries:.

Some countries, especially Australia, are providing keynote participation in identifying the various technical issues associated with developing, governing and explain blockchain wiki blockchains:. Don Tapscott conducted a two-year research project exploring how explain blockchain wiki technology can securely move and store host "money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes".

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Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto [11] and released as open-source software in Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, [13] products, and services. As of February , over , merchants and vendors accepted bitcoin as payment. The word bitcoin first occurred and was defined in the white paper [5] that was published on 31 October There is no uniform convention for bitcoin capitalization.

Some sources use Bitcoin , capitalized, to refer to the technology and network and bitcoin , lowercase, to refer to the unit of account. The unit of account of the bitcoin system is a bitcoin. Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.

As with most new symbols, font support is very limited. Typefaces supporting it include Horta. On 18 August , the domain name "bitcoin. In January , the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block. This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking.

The receiver of the first bitcoin transaction was cypherpunk Hal Finney , who created the first reusable proof-of-work system RPOW in In the early days, Nakamoto is estimated to have mined 1 million bitcoins. So, if I get hit by a bus, it would be clear that the project would go on. Over the history of Bitcoin there have been several spins offs and deliberate hard forks that have lived on as separate blockchains. These have come to be known as "altcoins", short for alternative coins, since Bitcoin was the first blockchain and these are derivative of it.

These spin offs occur so that new ideas can be tested, when the scope of that idea is outside that of Bitcoin, or when the community is split about merging such changes. Since then there have been numerous forks of Bitcoin.

See list of bitcoin forks. The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: The blockchain is a distributed database — to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.

This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight. Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.

Transactions are defined using a Forth -like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction.

As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer. Paying a transaction fee is optional. Because the size of mined blocks is capped by the network, miners choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs.

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse computing the private key of a given bitcoin address is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds.

The vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The network verifies the signature using the public key. If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; [9] the coins are then unusable, and effectively lost. Mining is a record-keeping service done through the use of computer processing power.

To be accepted by the rest of the network, a new block must contain a so-called proof-of-work PoW. Every 2, blocks approximately 14 days at roughly 10 min per block , the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.

The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees. To claim the reward, a special transaction called a coinbase is included with the processed payments. The bitcoin protocol specifies that the reward for adding a block will be halved every , blocks approximately every four years. Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins [f] will be reached c.

Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation. A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold [60] or store bitcoins, [61] due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger.

A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" [61] and allows one to access and spend them. Bitcoin uses public-key cryptography , in which two cryptographic keys, one public and one private, are generated. There are three modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements.

Third-party internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Physical wallets store offline the credentials necessary to spend bitcoins.

Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions. The first wallet program — simply named "Bitcoin" — was released in by Satoshi Nakamoto as open-source code. While a decentralized system cannot have an "official" implementation, Bitcoin Core is considered by some to be bitcoin's preferred implementation. Bitcoin was designed not to need a central authority [5] and the bitcoin network is considered to be decentralized.

In mining pool Ghash. The pool has voluntarily capped their hashing power at Bitcoin is pseudonymous , meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public.

In addition, transactions can be linked to individuals and companies through "idioms of use" e. To heighten financial privacy, a new bitcoin address can be generated for each transaction. Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility.

Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility. The blocks in the blockchain were originally limited to 32 megabyte in size.

The block size limit of one megabyte was introduced by Satoshi Nakamoto in , as an anti-spam measure. On 24 August at block , , Segregated Witness SegWit went live, introducing a new transaction format where signature data is separated and known as the witness.

The upgrade replaced the block size limit with a limit on a new measure called block weight , which counts non-witness data four times as much as witness data, and allows a maximum weight of 4 megabytes.

Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency. The question whether bitcoin is a currency or not is still disputed.

According to research produced by Cambridge University , there were between 2. The number of users has grown significantly since , when there were , to 1.

In , the number of merchants accepting bitcoin exceeded , Reasons for this fall include high transaction fees due to bitcoin's scalability issues, long transaction times and a rise in value making consumers unwilling to spend it. Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, and sends the obtained amount to merchant's bank account, charging a fee for the service.

Bitcoins can be bought on digital currency exchanges. According to Tony Gallippi , a co-founder of BitPay , "banks are scared to deal with bitcoin companies, even if they really want to".

In a report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers. Plans were announced to include a bitcoin futures option on the Chicago Mercantile Exchange in Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts.