Bitcoin, powered by the blockchain, is unique as it is the only form of currency that has nearly complete transparency in every transaction. Through the blockchain, anyone is able to view every Bitcoin transaction that has ever been executed, from the most recent exchange to the original genesis block. The blockchain is constantly growing as “completed” blocks are added to it with a new set of recordings. Each block is added to the blockchain in a linear, chronological order. Each computer connected to the Bitcoin network, used by a client to perform the task of validating and relaying transaction (known as “nodes”), receives a copy of the blockchain. The blockchain is automatically downloaded upon joining the larger Bitcoin network.
The “blocks” of the blockchain
A block is the “current” part of a blockchain which records some or all of the recent transactions, and once completed it becomes a permanent piece of the blockchain. Each block is placed within the blockchain in the proper, linear, chronological order with every block containing a hash of the block that came before it. While the blockchain provides an unprecedented amount of transparency to transactions, there is still an inherent security within each block that prevents viewing of the contents of a transaction. A useful comparison would be to a home address, or email address. Those addresses can be published publicly, but it does not give you any information about what your home looks like on the inside, or the contents of your email. You still need a private key to enter your home, or a password to access your email. The data placed within each block contains your unique signature but only you can unlock what is contained within that data.
Uses of the blockchain beyond Bitcoin
The underlying technological components of the blockchain have potential for uses far beyond simply Bitcoin. So far, there has been a variety of avenues that blockchain technology have already been applied towards, including withdrawing money from an ATM, trading shares in closely held companies, and offering loyalty points through airline miles.
There are number advantages of working with blockchain technology, and Deloitte recently released a report highlighting the three key characteristics that make the technology desirable across industries: (1) it is almost impossible to tinker with the blockchain without it being noticed, thus drastically reducing fraud, (2) the irrevocable nature of blockchain transactions increases the accuracy of records and simplifies back-office processes, and (3) the digital nature of the blockchain allows any document or asset to be expressed in code and then expressed in a ledger entry.