What are blockchains?
Blockchain is a database that contains a history of all the information stored there and consists of a chain of "blocks" of information that overlap on top of each other.
The databases represent an immutable shared history
In tech circles, one often hears a business offer, "It will be like the letter x [insert name of any successful business], but on blockchain." The enterprising entrepreneur quickly realizes that everyone is familiar with the technology and agrees on its benefits. But what is blockchain and what are its benefits?
Blockchain is a database that contains a history of all the information stored there and consists of a chain of "blocks" of information that overlap on top of each other. Bitcoin, one of the first blockchains, was created in 2009. It stores transaction data in bitcoins and is distinguished by the fact that its registry is distributed, publicly accessible and replicated on thousands of computers - or "nodes" - around the world. Instead of a centralized organization such as a bank or tech platform, it is verified by a decentralized network of individuals.
Although Bitcoin's blockchain is public, it is secure and trustworthy because of the combination of mathematical finesse and computational brute force built into its "consensus mechanism," the process by which nodes verify new transactions and add them to the blockchain. Computers compete to solve a cryptographic problem - the first one to do so wins newly mined coins - and a new block is added.
New blockchains, as Ethereum, store more information, such as strings of computer code. A function or application that is programmed into the code is guaranteed to work. Developers can write conditional code - software that executes after a certain trigger - allowing them to create "smart contracts" about future events.
Compared to private networks, open public blockchains are transparent (anyone can view them), unrestricted (anyone can use them), and resistant to censorship (no one can stop them). But because they require consensus, building applications that conduct financial activities and distribute digital content on top of a blockchain can be slower and more complicated than working through trusted intermediaries. Building "x" on blockchain may make sense, but it's easier said than done.
