Blockchain, famous for providing the engine for various digital currency systems such as Bitcoin, describes a process that aims to make databases more equitable, transparent and almost completely tamper-proof.
While this is an ideal outcome, there remains debate about whether the technology has actually achieved its aims.What’s more, the way in which it is doing so makes it a questionable technology in a warming world.
Why is it called blockchain?
A ‘block’ in a blockchain is a ledger of publicly available data. This can be just about anything, from the details of a monetary transaction to medical records and proof of ownership. It can be shared by a small group of friends or open to everyone in the world.
In the 1990s, the development of blockchain emerged as a way to ensure that changes to documents were securely time-stamped. Then in 2009, an engineer with the pseudonym Satoshi Nakamoto designed a database based on blockchain technology for a cryptocurrency called Bitcoin.
What distinguishes the concept from many other databases and open documents is a unique identifier called a “hash” based on the content of the document, which provides a randomly generated code called a “nonce”.
Changing a block means creating a new Hash, which equals a completely new block. This new block refers to the Hash of the previous block on which they are based; this is what makes a series of blocks a blockchain.
Since each new block saves the previous Hash, the technology is in principle tamper-proof. If someone edits a block from an earlier period in the chain, perhaps rewriting its ownership date or changing a value, its Hash will also change. As a result, blocks that extend down that chain will no longer be connected to it, rendering it invalid.
How does blockchain technology work and why is it so controversial?
In fact, there are two methods to ensure that every node in a blockchain is legitimate.
In permissioned blockchains, a consensus on the answer to these calculations based on the content of each block is required. If most copies of a chain agree on the calculation of the next block, it is accepted.
Permissionless blockchains demand a roundabout process each time a new block is created. The calculations, defined as a selection mechanism, are based on a built-in puzzle that takes some time to solve.
