What is Blockchain? Everything you need to know

Blockchain - latest statistics

- By 2025, ten percent of global GDP will be stored on blockchains or blockchain-related technology (World Economic Forum)

- 369,098 - The highest number of confirmed Bitcoin transactions in one day (May 14th) over the past year (Blockchain.info)

- 80 per cent of the world’s Bitcoin mining nodes are located in China (Cryptocoins News

Blockchain: What’s new 

30/08 - FEATURE - Shaan Mulchandani/Aricent - Five ways blockchains can transform products, platforms and services - Blockchain has the potential to change the way organisations do business...

23/08 - NEWS - IBM blockchain targets worldwide food safety - Computing titan teams up with some of the world's biggest food companies to use its cloud-based blockchain to track any issues...

11/08 - FEATURE - Floyd DCosta/Block Armour - Harnessing blockchain technology for digital transformation - Could blockchain be the next big platform to drive enterprise digital transformation? 

11/08 - NEWS - Microsoft unveils Coco Framework, aimed at boosting blockchain - Developed with Intel, the new service aims to improve performance, as well as governance and confidentiality...

03/08 - FEATURE - Phil Beckett/Alvarez and Marsal - Blockchain can be the good guy in the cyber wild west - This emerging technology has the potential to become the most important anti-fraud mechanism known to business...

01/08 - NEWS - Blockchain really is the future of FinTech - Embracing digital cryptocurrencies will help financial services grow and prosper, Cognizant survey predicts...

01/08 - FEATURE - Antony Abell/TrustMe - Can Blockchain secure industrial processes? -  Blockchain technology could be used as a means of promoting digital trusts between organisations and their customers...

19/07 - NEWS: London Stock Exchange to start using blockchain - London's main Stock Exchange is set to start using blockchain to improve transparency for shareholding information among unlisted businesses and draw more mature investors...  

12/07 - FEATURE - Luis Carranza/London Fintech Week - Can London’s DNA of regulation, culture and tradition save its FinTech industry amidst its EU divorce? - Although uncertainty continuing to swirl surrounding Brexit, for a sector which contributes over £6bn to the UK economy and at this critical moment in our history, can we really afford to rely on our heritage alone?

22/06 - FEATURE - Gavin Fell/Exact - The entrepreneur’s guide to robots, IoT, VR and blockchain - As a tool for every budding entrepreneur, we’ve assembled an overview of the most important technologies to watch right now...

21/06 - FEATURE - David Blundell/BlockPool - Blockchain technology could be the key to better targeted advertising - The ability to trace and manage transactions that could make blockchain highly disrupting in advertising - and here's why...

09/06 - FEATURE - Shahar Namer/CryptoChip.io - Land-based casinos discovering cryptocurrency - As the saying goes, “if you can’t beat them, join them.” This is why offline casinos are changing and adapting to the new marketplace, with blockchain and cryptocurrencies being one of the top new methods...

(Image: © Image source: Shutterstock/MaximP)

What is Blockchain? 

Like much of the technology world, cryptocurrencies such as Bitcoin still rely on some form of database that are able to track large volumes of transactions and keep them secure.The solution used by many of the world’s largest digital currencies is the blockchain. 

First implemented in 2009, and revolutionised with ‘Blockchain 2.0’ in 2014, Blockchain technology consists of blocks that hold batches of timestamped transactions, each block is linked to the previous one through cryptography, thus forming a chain.

As the world becomes ever more smarter and inter-connected, cryptocurrencies have become an increasingly attractive proposition for growing markets that may not have traditional banking infrastructure. Several developing third-world nations have implemented blockchain-based national currencies, and the technology is also used by several major charity projects to help those without bank accounts.

Blockchain also offers the possibility of creating a fraud-proof system for transacting exchanges. It therefore has potential for use outside of the digital currency sphere and is attracting interest among traditional financial institutions and elsewhere.

Blockchain FAQ 

  • How does Blockchain work? 

A blockchain system consists of two types of record, transactions and blocks. Transactions are simply the actions carried out in a particular period, these are stored together in a block.

What makes blockchain more unique is that each block contains the cryptographic hash of the previous one, thus forming a chain. What a cryptographic hash does is take the data from the previous block and transform it into a compact string. Since these strings are impossible to predict it means that any tampering with the chain is easily detected. 

This method means that blocks don’t need to have serial numbers, the hash allows them to be uniquely identified as well as verifying their integrity. Each block confirms the validity of the previous one right back to the so called ‘genesis block’ at the start of the chain.

The linking of blocks isn’t the only thing that keeps the chain secure, however. It’s also decentralised, each computer with the software installed has a copy of the blockchain which is constantly updated with new blocks. There is no centralised server holding the transactions and because each new block must meet the requirements of the chain nobody is able to overwrite previous transactions.

Other transaction requirements can be added to define what constitutes a valid entry. In Bitcoin for example a valid transaction has to be digitally signed, it has to spend one or more unspent outputs of previous transactions, and the sum of transaction outputs cannot exceed the sum of input

  • What are some of the biggest blockchain databases? 

Blockchain has exploded in popularity over the last few years, gaining backers throughout the technology and financial sectors.

Away from Bitcoin, which remains the most well-known and arguably most widely-used network, this has led to a number of alternative blockchains coming to the fore in recent times.

This includes R3, which is developing blockchain-esque technology that can be used by major banking institutions, and in May 2017 raised $107 million in funding from backers such as Intel, HSBC and Bank of America. 

Another major player is Hyperledger, an open-source cross-industry collaboration created by the Linux Foundation in order to popularise blockchain-based ledgers, with the first generation of its technology released in July 2017.

All the so-called ‘big four’ accounting firms have also said they are testing blockchain technologies, although so far only Ernst and Young have gone public with their technology, making a digital wallet available to all its Swiss employees.

IBM announced in March 2017 that it will be building its own ‘blockchain as a service’ offering based on Hyperledger, which will allow customers to build secure blockchain networks.

Earlier this year, the London Stock Exchange also revealed it was is set to start using blockchain to improve transparency for shareholding information among unlisted businesses, showing the impact the technology has had. 

  • How secure is blockchain? 

Due to its advanced cryptographic protection systems, Blockchain in theory offers a far more secure experience than traditional banking.

The fact that the technology is decentralised, and cannot be retroactively altered or edited makes it ideal for financial transactions and the storing of important information.

Blockchain also benefits from being able to preserve the privacy of the user - however this has unfortunately made it increasingly popular as the payment method of choice for cyber criminals, as a Bitcoin network node doesn’t have to reveal the identity of the person making or receiving payments.

  • What is Blockchain 2.0? 

As Blockchain grew and evolved, companies began to think of new applications for the technology. In 2014, ‘Blockchain 2.0’ became popularised as the umbrella term for this new ecosystem, which saw the technology being used for smarter and more advanced use cases that respond to certain triggers. 

For example invoices could be set to pay themselves automatically when goods are delivered, or smart contracts could trigger payments when parts of a project are completed.

Blockchain 2.0 has the potential to open up the technology for use in other industries beyond pure finance. In the music business, for example, blockchain 2.0 could be used in managing copyrights and collecting royalties from digital streaming and downloads. It could be employed for asset registers, managing things like property, vehicles or machinery and introducing the ability to charge accurately based on usage.

Blockchain resources

Blockchain charts - real-time information on the current market price, block size, daily transactions and more 

What is Blockchain Technology? A step-by-step guide to blockchain technology for beginners interested in using the system

IBM Blockchain - A repository of information on IBM’s work into blockchain technology