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THE FACTS OF BLOCKCHAIN
A DISTRIBUTED DATABASE OR LEDGER THAT IS SHARED BY ALL OF THE NODES IN A COMPUTER

NETWORK IS KNOWN AS A BLOCKCHAIN. A BLOCKCHAIN FUNCTIONS AS A DATABASE THAT
ELECTRONICALLY STORES DATA IN DIGITAL FORM. FOR KEEPING A SECURE AND DECENTRALIZED
RECORD OF TRANSACTIONS, BLOCKCHAINS ARE WELL KNOWN FOR THEIR CRITICAL ROLE IN
CRYPTOCURRENCY SYSTEMS LIKE BITCOIN. A BLOCKCHAIN'S NOVELTY IS THAT IT FOSTERS CONFIDENCE
WITHOUT THE REQUIREMENT FOR A RELIABLE THIRD PARTY BY ENSURING THE ACCURACY AND
SECURITY OF A DATA RECORD. THE WAY THE DATA IS ORGANIZED IN A BLOCKCHAIN SIGNIFICANTLY
DIFFERS FROM HOW IT IS TYPICALLY ORGANIZED. IN A BLOCKCHAIN, DATA IS GATHERED INTO GROUPS
CALLED BLOCKS THAT EACH INCLUDE SETS OF DATA. BLOCKS HAVE SPECIFIC STORAGE CAPABILITIES,
AND WHEN FILLED, THEY ARE SEALED AND CONNECTED TO THE BLOCK THAT CAME BEFORE THEM TO
CREATE THE DATA CHAIN KNOWN AS THE BLOCKCHAIN. EVERY ADDITIONAL PIECE OF INFORMATION
THAT COMES AFTER THAT NEWLY ADDED BLOCK IS COMBINED INTO A BRAND-NEW BLOCK, WHICH IS
THEN ADDED TO THE CHAIN ONCE IT IS FULL. IN CONTRAST TO DATABASES, WHICH TYPICALLY
ORGANIZE DATA INTO TABLES, A BLOCKCHAIN, AS THE NAME SUGGESTS, ORGANIZES DATA INTO UNITS
(BLOCKS) THAT ARE LINKED TOGETHER. WHEN USED IN A DECENTRALIZED MANNER, THIS DATA
STRUCTURE AUTOMATICALLY CREATES AN IRREVERSIBLE CHRONOLOGY OF DATA. ONCE A BLOCK IS
FILLED, IT IS UNCHANGEABLE AND INTEGRATED INTO THE CHRONOLOGY. WHEN A BLOCK IS ADDED TO
THE CHAIN, AN ACCURATE TIMESTAMP IS ASSIGNED TO THAT BLOCK.
BLOCKCHAINS ARE A SPECIFIC KIND OF SHARED DATABASE THAT DIFFERS FROM CONVENTIONAL
DATABASES IN THE WAY THEY STORE DATA. BLOCKCHAINS STORE DATA IN BLOCKS THAT ARE
SUBSEQUENTLY CONNECTED VIA CRYPTOGRAPHY. IT IS ADDED TO A BRAND-NEW BLOCK AS NEW DATA
ARRIVES. DATA BLOCKS ARE CHAINED TOGETHER IN CHRONOLOGICAL ORDER ONCE THEY HAVE BEEN
FILLED WITH INFORMATION. THIS IS DONE BY CHAINING THE COMPLETED BLOCK ONTO THE ONE
BEFORE IT. A BLOCKCHAIN CAN BE USED TO STORE OTHER TYPES OF DATA, BUT UP UNTIL NOW,
TRANSACTION LEDGERS HAVE BEEN THE MOST WIDELY USED APPLICATION. BLOCKCHAIN IS UTILIZED IN
THE CONTEXT OF BITCOIN IN A DECENTRALIZED MANNER, ENSURING THAT NO ONE USER OR GROUP
HAS CONTROL BUT RATHER THAT ALL USERS COLLECTIVELY MAINTAIN CONTROL. SINCE DECENTRALIZED
BLOCKCHAINS ARE IMMUTABLE, THE DATA ENTERED INTO THEM CANNOT BE CHANGED. THIS IMPLIES
THAT TRANSACTIONS MADE USING BITCOIN ARE PUBLICLY VISIBLE AND PERMANENTLY RECORDED.
BLOCKCHAIN AIMS TO MAKE IT POSSIBLE TO SHARE AND RECORD DIGITAL INFORMATION WITHOUT
EDITING IT. A BLOCKCHAIN SERVES AS THE BASIS FOR IMMUTABLE LEDGERS, OR RECORDS OF
TRANSACTIONS THAT CANNOT BE CHANGED, REMOVED, OR DESTROYED. BECAUSE OF THIS,
BLOCKCHAINS ARE ALSO REFERRED TO AS DISTRIBUTED LEDGER TECHNOLOGIES (DLT). THE
BLOCKCHAIN IDEA WAS FIRST PUT FORTH AS A RESEARCH PROJECT IN 1991, LONG BEFORE BITCOIN
BECAME A WIDELY USED APPLICATION IN 2009. SINCE THEN, THE INTRODUCTION OF NUMEROUS
CRYPTOCURRENCIES, DECENTRALIZED FINANCE (DEFI) APPLICATIONS, NON-FUNGIBLE TOKENS (NFTS),
AND SMART CONTRACTS HAS LED TO AN EXPLOSIVE GROWTH IN THE USE OF BLOCKCHAINS.
DECENTRALIZATION OF THE BLOCKCHAIN

CONSIDER A BUSINESS WITH A SERVER FARM OF 10,000 MACHINES THAT IT USES TO KEEP A DATABASE
WITH ALL OF ITS CLIENTS' ACCOUNT INFORMATION. ALL OF THESE COMPUTERS ARE LOCATED IN A
WAREHOUSE THAT BELONGS TO THIS CORPORATION, AND IT HAS COMPLETE AUTHORITY OVER EACH
OF THEM AS WELL AS THE DATA THEY HOLD. BUT THIS CREATES A SINGLE POINT OF FAILURE. WHAT
WOULD HAPPEN IF THE ELECTRICITY AT THAT PLACE FAILED? WHAT IF THE COMPUTER'S INTERNET
CONNECTION IS LOST? WHAT IF IT COMPLETELY BURNS DOWN? WHAT HAPPENS IF A MALICIOUS
PERSON DELETES EVERYTHING WITH A SINGLE KEYPRESS? THE INFORMATION IS EITHER MISSING OR
DAMAGED. WHAT A BLOCKCHAIN DOES IS ENABLE THE DISTRIBUTION OF THE DATA STORED IN THAT
DATABASE ACROSS MULTIPLE NETWORK NODES LOCATED IN DIFFERENT PLACES. THIS NOT ONLY ADDS
REDUNDANCY BUT ALSO PRESERVES THE ACCURACY OF THE DATA STORED THERE; FOR EXAMPLE, IF
SOMEONE TRIES TO CHANGE A RECORD AT ONE DATABASE INSTANCE, THE OTHER NODES WON'T BE
CHANGED, PREVENTING A BAD ACTOR FROM DOING SO. ALL OTHER NODES WOULD CROSS-REFERENCE
ONE ANOTHER AND BE ABLE TO QUICKLY IDENTIFY THE INDIVIDUAL WHO TAMPERED WITH BITCOIN'S
TRANSACTION HISTORY. THIS APPROACH AIDS IN CREATING A CLEAR AND PRECISE SEQUENCE OF
EVENTS. THIS PREVENTS ANY ONE NODE IN THE NETWORK FROM CHANGING THE DATA IT CONTAINS.
AS A RESULT, THE DATA AND HISTORY (SUCH AS THOSE OF CRYPTOCURRENCY TRANSACTIONS) ARE
IRREVERSIBLE. A BLOCKCHAIN MAY STORE A VARIETY OF DATA, INCLUDING LEGAL CONTRACTS, STATE
IDENTIFICATIONS, OR A COMPANY'S GOODS INVENTORY. SUCH A RECORD MAY BE A LIST OF
TRANSACTIONS (SUCH AS WITH A CRYPTOCURRENCY).
TRANSPARENCY
DUE TO THE DECENTRALIZED STRUCTURE OF THE BITCOIN BLOCKCHAIN, ALL TRANSACTIONS MAY BE
TRANSPARENTLY OBSERVED BY UTILIZING BLOCKCHAIN EXPLORERS, WHICH ENABLE ANYBODY TO
EXAMINE TRANSACTIONS AS THEY HAPPEN IN REAL TIME, OR BY OWNING A PERSONAL NODE. AS NEW
BLOCKS ARE ADDED AND CONFIRMED, EACH NODE'S COPY OF THE CHAIN IS UPDATED. THIS IMPLIES
THAT YOU MIGHT FOLLOW BITCOIN WHEREVER IT WENT IF YOU SO DESIRED. AS AN ILLUSTRATION,
EXCHANGES HAVE PREVIOUSLY BEEN HACKED, AND ANYONE WHO HAD BITCOIN STORED THERE LOST
EVERYTHING. THE STOLEN BITCOINS ARE CLEARLY IDENTIFIABLE, DESPITE THE HACKER'S COMPLETE
ANONYMITY. IT WOULD BE KNOWN IF ANY OF THE BITCOINS TAKEN IN SOME OF THESE HACKS WERE
TRANSFERRED OR USED ELSEWHERE. NATURALLY, THE DATA KEPT ON THE BITCOIN BLOCKCHAIN (AS
WELL AS THE MAJORITY OF OTHERS) IS ENCRYPTED. THIS IMPLIES THAT ONLY THE RECORD'S OWNER
WILL BE ABLE TO DECODE THE FILE AND EXPOSE THEIR IDENTITY (USING A PUBLIC-PRIVATE KEY PAIR).
AS A RESULT, BLOCKCHAIN USERS CAN MAINTAIN THEIR ANONYMITY WHILE MAINTAINING
TRANSPARENCY.
DECENTRALIZED SECURITY AND TRUST ARE MADE POSSIBLE BY BLOCKCHAIN TECHNOLOGY IN A

NUMBER OF WAYS. TO START, NEW BLOCKS ARE ALWAYS CHRONOLOGICALLY AND LINEARLY STORED.
IN OTHER WORDS, THEY ARE CONSTANTLY ADDED TO THE BLOCKCHAIN'S "END." IT IS VERY DIFFICULT
TO GO BACK AND CHANGE THE CONTENTS OF A BLOCK ONCE IT HAS BEEN ADDED TO THE BLOCKCHAIN
UNLESS A MAJORITY OF THE NETWORK HAS AGREED TO DO SO. THIS IS DUE TO THE FACT THAT EACH
BLOCK HAS ITS OWN HASH, AS WELL AS THE HASH OF THE BLOCK THAT CAME BEFORE IT AND THE
AFOREMENTIONED DATE. A MATHEMATICAL FUNCTION THAT CONVERTS DIGITAL INFORMATION INTO
A STRING OF NUMBERS AND LETTERS PRODUCES HASH CODES. THE HASH CODE ALSO CHANGES IF THAT
DATA IS ALTERED IN ANY WAY. IMAGINE A HACKER WHO ALSO MANAGES A NODE ON A BLOCKCHAIN
NETWORK AND WANTS TO CHANGE THE BLOCKCHAIN AND TAKE EVERYONE ELSE'S CRYPTOCURRENCY.
IF THEY CHANGED THEIR OWN COPY, IT WOULDN'T MATCH THE COPIES MADE BY EVERYONE ELSE.
WHEN EVERYONE COMPARES THEIR COPIES TO ONE ANOTHER, THEY WILL NOTICE THAT THIS ONE COPY
STANDS OUT, AND THE HACKER'S VERSION OF THE CHAIN WILL BE REJECTED AS FRAUDULENT.
TO BE SUCCESSFUL, THE HACKER WOULD NEED TO SIMULTANEOUSLY POSSESS AND CHANGE AT LEAST
51% OF THE BLOCKCHAIN COPIES, MAKING THEIR NEW COPY THE MAJORITY COPY AND, THUS, THE
CHAIN THAT HAS BEEN AGREED UPON. DUE TO THE FACT THAT EVERY BLOCK WOULD NEED TO BE
RECREATED BECAUSE OF THE NEW TIMESTAMPS AND HASH CODES, SUCH AN ASSAULT WOULD ALSO
NECESSITATE A TREMENDOUS AMOUNT OF RESOURCES AND MONEY.
THE COST TO ACCOMPLISH SUCH A FEAT MOST LIKELY WOULDN'T BE ATTAINABLE GIVEN THE SCALE OF
MANY CRYPTOCURRENCY NETWORKS AND HOW QUICKLY THEY ARE EXPANDING. NOT ONLY WOULD
THIS BE ENORMOUSLY EXPENSIVE, BUT IT WOULD ALSO PROBABLY BE POINTLESS. DOING SO WOULD
DRAW ATTENTION SINCE NETWORK USERS WOULD NOTICE SUCH SIGNIFICANT CHANGES TO THE
BLOCKCHAIN.
MEMBERS OF THE NETWORK WOULD SUBSEQUENTLY HARD FORK OFF TO A NEW, UNAFFECTED
VERSION OF THE CHAIN. THIS WOULD RESULT IN A SHARP DECLINE IN THE VALUE OF THE ATTACKED
VERSION OF THE TOKEN, RENDERING THE ATTACK EVENTUALLY USELESS BECAUSE THE BAD ACTOR
WOULD THEN BE IN CONTROL OF A WORTHLESS ASSET. THE SAME WOULD HAPPEN IF THE MALICIOUS
PARTY FORKED BITCOIN AND ATTACKED THE NEW FORK. IT IS DESIGNED THIS WAY SO THAT
PARTICIPATING IN THE NETWORK OFFERS MUCH GREATER FINANCIAL INCENTIVES THAN TRYING TO
UNDERMINE IT.
AS WE NOW UNDERSTAND, BLOCKS ON THE BLOCKCHAIN OF BITCOIN STORE INFORMATION ABOUT

MONETARY TRANSACTIONS. MORE THAN 10,000 ADDITIONAL CRYPTOCURRENCY SYSTEMS ARE
CURRENTLY ACTIVE ON THE BLOCKCHAIN. HOWEVER, IT TRANSPIRES THAT USING A BLOCKCHAIN TO
STORE INFORMATION ABOUT OTHER KINDS OF TRANSACTIONS IS ALSO A SECURE METHOD.
FINANCE AND BANKING
BANKING IS ONE SECTOR THAT MIGHT STAND TO GAIN THE MOST FROM INCORPORATING BLOCKCHAIN
INTO ITS CORPORATE OPERATIONS. FINANCIAL INSTITUTIONS ARE ONLY OPEN DURING REGULAR
BUSINESS HOURS, WHICH ARE TYPICALLY FIVE DAYS PER WEEK. AS A RESULT, IF YOU ATTEMPT TO
DEPOSIT A CHECK ON FRIDAY AT 6 P.M., YOU PROBABLY WON'T SEE THE FUNDS IN YOUR ACCOUNT
UNTIL MONDAY MORNING. DUE TO THE ENORMOUS VOLUME OF TRANSACTIONS THAT BANKS MUST
SETTLE, EVEN IF YOU MAKE YOUR DEPOSIT WITHIN BUSINESS HOURS, IT MAY STILL TAKE ONE TO THREE
DAYS FOR THE TRANSACTION TO BE VERIFIED. BLOCKCHAIN, HOWEVER, IS ALWAYS ACTIVE. WALMART,
PFIZER, AIG, SIEMENS, UNILEVER, AND NUMEROUS OTHER BUSINESSES ARE JUST A FEW THAT HAVE
ALREADY ADOPTED BLOCKCHAIN TECHNOLOGY. FOR INSTANCE, IBM DEVELOPED THE FOOD TRUST
BLOCKCHAIN TO TRACK FOOD GOODS' ROUTES TO THEIR DESTINATIONS. CUSTOMERS MAY EXPECT
THEIR TRANSACTIONS TO BE PROCESSED BY BANKS USING BLOCKCHAIN IN AS LITTLE AS 10 MINUTES—
BASICALLY THE TIME IT TAKES TO ADD A BLOCK TO THE BLOCKCHAIN, REGARDLESS OF THE DAY OF THE
WEEK OR HOLIDAYS. BANKS NOW HAVE THE ABILITY TO SECURELY AND SWIFTLY TRANSFER MONEY
BETWEEN ORGANIZATIONS THANKS TO BLOCKCHAIN TECHNOLOGY. FOR INSTANCE, IN THE STOCK
TRADING INDUSTRY, THE SETTLEMENT AND CLEARING PROCESS MAY TAKE UP TO THREE DAYS (OR
LONGER IF TRADING IS DONE WORLDWIDE), DURING WHICH TIME THE MONEY AND SHARES ARE
FROZEN.
CURRENCY
FOR CRYPTOCURRENCIES LIKE BITCOIN, THE BLOCKCHAIN SERVES AS THE FOUNDATION. THE FEDERAL
RESERVE IS IN CHARGE OF THE US DOLLAR. A USER'S DATA AND MONEY ARE TECHNICALLY SUBJECT TO
THE WHIMS OF THEIR BANK OR GOVERNMENT UNDER THIS SYSTEM OF CENTRAL POWER. THE PRIVATE
INFORMATION OF A CLIENT IS IN DANGER IF THEIR BANK IS HACKED. THE VALUE OF THE CLIENT'S
MONEY MAY BE IN JEOPARDY IF THEIR BANK FAILS OR IF THEY RESIDE IN A NATION WITH A VOLATILE
GOVERNMENT. A NUMBER OF FAILING BANKS WERE PARTIALLY BAILED OUT IN 2008 WITH TAXPAYER
FUNDS. THESE ARE THE CONCERNS THAT LED TO THE INITIAL CONCEPTION AND DEVELOPMENT OF
BITCOIN. BLOCKCHAIN ENABLES BITCOIN AND OTHER CRYPTOCURRENCIES TO FUNCTION
DECENTRALIZEDLY BY DISPERSING THEIR ACTIVITIES ACROSS A NETWORK OF COMPUTERS. IN ADDITION
TO LOWERING RISK, THIS ALSO DOES AWAY WITH NUMEROUS PROCESSING AND TRANSACTION
EXPENSES. ADDITIONALLY, IT CAN PROVIDE PEOPLE IN NATIONS WITH WEAK FINANCIAL SYSTEMS OR
CURRENCIES WITH A MORE STABLE CURRENCY THAT HAS A WIDER RANGE OF USES AND A LARGER
NETWORK OF CONTACTS WITH WHOM THEY CAN DO BUSINESS BOTH LOCALLY AND ABROAD.

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THE FACTS OF BLOCKCHAIN

A DISTRIBUTED DATABASE OR LEDGER THAT IS SHARED BY ALL OF THE NODES IN A COMPUTER

DECENTRALIZATION OF THE BLOCKCHAIN

DECENTRALIZED SECURITY AND TRUST ARE MADE POSSIBLE BY BLOCKCHAIN TECHNOLOGY IN A

AS WE NOW UNDERSTAND, BLOCKS ON THE BLOCKCHAIN OF BITCOIN STORE INFORMATION ABOUT

FINANCE AND BANKING

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