Grasping blockchain, it’s more than just bitcoin

OK, OK, I said I wouldn’t mention the “ransomware that shall not be named” again, but…

With all the focus on how people are supposed to pay to have their files decrypted, a lot of people have been asking about bitcoin.  There are many types of cryptocurrency, bitcoin is simply one of them.  Each cryptocurrency, though, relies on a technology called “blockchain.”

Blockchain, in turn, is much larger than cryptocurrency.  It is really a technology that can help track real estate ownership, transfer of tangible property, contracts,  and other agreements.

Now, I’m not going to get into the nitty-gritty.  There are a bunch of articles, books, websites, and YouTube videos that can explain the cryptography and protocols underlying blockchain.  What I would like to do is give a very high explanation of blockchain.  So, from 40,000 feet:

  1. Someone wants to transfer something to someone else (bitcoin, property, contract)
  2. That person creates a transaction with the other party.
  3. The transaction is grouped with other transactions to create a “block”
  4. The block is transferred to nodes responsible for validating the block (miners)
  5. Once the block is validated, it is added to the blockchain

The blockchain is  then autonomously distributed to a peer-to-peer network.  In effect blockchain is a widely distributed write-only ledger, so blocks cannot be altered without the entire network becoming aware of the modification.  This transparency adds to the technology’s security.

For an idea of where blockchain could be headed, check out an article I co-wrote for the e-commerce times.