Blockchain

What is blockchain?

A blockchain is a distributed database that maintains a list of transactions and is protected from forgery or modification by storage nodes. Thus, a blockchain is a decentralized history of all transactions since the inception of the distributed system.

To make it easier to explain exactly what a blockchain entails, this form of data management is best compared to a spreadsheet or Excel worksheet. This Excel worksheet is shared with everyone (hence it is referred to as a distributed system); everyone who participates gets an exact copy of the Excel worksheet and can access its contents. Changes can be made in this Exel worksheet, which are immediately replicated on all other copies of this Excel worksheet. 

Not all changes are possible. Only additions can be made to the list (say in an Excel context, new rows at the bottom of the worksheet). It is not possible to make changes to the existing rows in the worksheet, thanks to the use of cryptographic software.

Decentralized system

The key feature of a distributed system such as blockchain is the absence of a central authority.

Thus, there is no central authority that, for example, verifies the identity of network users and records their transactions; there is no central authority that intervenes when discussions arise between system participants, etc. This role is usually played by intermediaries (such as banking institutions) or trusted third parties (such as notaries or trust service providers).

Users of the system no longer put their trust in an intermediary, but in technology.

This does need some nuance. Whereas disintermediation is effectively the case with public blockchains, with private blockchains, rules will be set by a particular provider. Even in the case of smart contracts/smart contracts may require the intervention of a third party ("Oracle/Oracle") called) to electronically establish that certain events have occurred that require the contract to be performed.

Distributed system

Cryptography

Trust in blockchain technology stems from the use of encryption algorithms.

DAO

Public, private and consortium blockchains

An public blockchain is an open system in which anyone can participate and/or contribute (such as providing processor power to verify transactions). It is a completely decentralized system where no one can exercise control over the entire system. The best-known example of a public blockchain is Bitcoin.

Public blockchains often operate a reward system for those who help verify transactions. For example, in the case of Bitcoin, the "miners" are rewarded with new bitcoins.

An consortium blockchain is open only to a selected group of participants. Within this closed group, data and transactions are shared. This form is interesting for banking or insurance institutions.

An private blockchain is a closed system used within an enterprise. Data can then be shared between departments or branches of a company.