An Introduction to the Blockchain

This chapter serves as an introduction to the blockchain and its underlying technology. It requires minimal technical knowledge. It summarizes the content that you can expect to encounter in the upcoming chapters that go into greater depth. In this chapter, I will explain the blockchain technology is on a more architectural level, rather than describing every detail of each component or layer.

When you ask 10 people what they think the term blockchain means, you might not be surprised to get 10 different and conflicting answers, as use of the term blockchain can be a bit confusing. A lot of people connect it to Bitcoin (https://bitcoin.org/) or other virtual (crypto) currencies. Some people talk about the Ethereum Application Platform (https://ethereum.org), some about smart contracts (executable code), but most of the time, blockchain is explained as a distributed, shared ledger.

In essence, a blockchain is a system of maintaining digitally-distributed ledgers in a way that allows individuals who do not fully trust each other to agree on updates to the shared ledger. Blockchains use peer-to-peer protocols rather than a central authority or third party to distribute and verify transactions between entities. There is no single point of failure, so entities can appear, disappear, or malfunction without affecting the group.

In this chapter, you will learn about the following topics:

• What is a blockchain and how does it work?
• What is the architecture behind the blockchain ecosystem?
• What are the differences between public and private blockchains?
• How secure is a blockchain, and what about an individual's privacy?
• What kind of applications can run on a blockchain?