Blockchain

The Blockchain is a specific implementation of the distributed ledger technology (DLT) concept. It has received increasing attention since 2009 in form of the Bitcoin and its underlying Bitcoin Core Protocol. Basically, it is a virtual ledger within a network of computers, where every change is recorded and stored in a decentralized way [1].

 

The name of the technology refers to its data structure. Transactions are stored and cryptographically sealed in consecutive data blocks interlinked on basis of hash functions to prior data along a chain. This interconnection between blocks is one reason for a cryptographic immutability of transactions [2]. Depending on access rights and the permission to validate transactions, three generic types of Blockchain Frameworks have been established in practice: Public Blockchains, Private Blockchains or Permissioned Blockchains. The Blockchain is the basis for cryptocurrencies such as Bitcoin or Ether, which are each based on a Public Blockchain.

[1] IHK Region Stuttgart

[2] Karzel, D., Klinger, P.

[3] Plazibat, A. (2019): The Business Potential of Distributed Ledger Technology

In General, the Blockchain is characterized by the following five features [3]:

  • Distributed: Data on the Blockchain is sent decentralized to all nodes.

  • Unchangeable: If a block is appended to the Blockchain, it cannot be changed.

  • Transparent: The Blockchain is completely transparent for users who have access to the Blockchain.

  • Global Source of Trust: Nodes in the Blockchain can be sure that all other nodes see the same data after mining.

  • Programmable: Due to the unchangeability and traceability, contractual obligations can be represented as code.

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