Blockchain

A Blockchain is just another type of database for recording transactions. The transaction is copied to all of the computers in a participating network. A blockchain is thus sometimes referred to as a 'distributed ledger'. Data in a blockchain is stored in fixed structures called 'blocks'. 

Blockchain Block Structure

The important parts of a block are: 

Header - which includes metadata, such as a unique block reference number, the time the block was created and a link back to the previous block 

Content (Body) - usually a validated list of digital assets and instruction statements, such as transactions made, their amounts, and the addresses of the parties to those transactions.

Given the latest block, it is possible to access all previous blocks linked together in the chain, so a blockchain database retains the complete history of all assets and instructions executed since the very first one - making its data verifiable and independently auditable. As the number of participants grows, it becomes harder for malicious actors to overcome the verification activities of the majority. Therefore the network becomes increasingly robust and secure. Indeed, blockchain solutions are being discussed as a potential means of protecting data from nuclear power stations, flood-defense mechanisms, and other critical infrastructure.

Blockchain Architecture

Type of Blockchain

1. Public Blockchain

2. Private Blockchain

Difference between Public and Private Blockchain

Like many other types of databases, blockchains can be public or private. 

Private Blockchains, on the other hand, are networks where the participants are known "a priori" and have permission to update the ledger. Participants may come from the same organization or from different organizations within an industry sector where the relationships between them are governed by informal arrangements, formal contracts, or confidentiality agreements. 

The Bitcoin network is public because anyone can read or write data from or to the ledger if they are running the appropriate Bitcoin software. 

In the absence of trust, public blockchains typically require additional mechanisms to arbitrate disputes among participants and protect the integrity of the data. This involves added complexity because there is no central authority to arbitrate in a decentralized network. 

In the Bitcoin blockchain, for example, new transactions can only be added to the blockchain after a participant on the network solves a complex mathematical problem, known as a 'proof-of-work'. This process is called 'mining'. The effort miners have to expend on finding a solution to this mathematical problem acts as a sign that the transactions are valid, even though the miners may not know one another.