Blockchain has no standard definition but refers to a group of data storage structures and are a form of Distributed Ledger Technology that do not rely on a central authority to maintain and validate the data held in the ledger. Instead, the actors in the network carry out this function and form a consensus regarding the transaction history held in the ledger.
The blockchain is initiated with a genesis block. Additional data is then compiled into a block and then cryptographically linked to the previous block using hash functions to form a chain.
A blockchain structure can be used to guarantee the validity of the data held within it. But blockchains cannot guarantee that the data is a correct representation of reality nor can it guarantee the privacy of the actors using it.
Blockchains can, although don’t necessarily have to, implement the following:
- Nakamoto consensus – required when there is a large group of unidentified actors
- Cryptotokens – to incentivize and punish certain behaviours on the network
- Linked timestamping – to ensure consistency and security
- State replication – to ensure local copies are the same across the network