The blockchain data structure (which is a part of, but distinct from the larger Blockchain ecosystem) consists, perhaps unsurprisingly, of an ordered series of “blocks.”
In addition to a payload of data and a few other housekeeping values, each block (except the first one, the “genesis” or “origination” block) contains the hash of the previous block. As described in a previous post, hash values are easy to verify and challenging to fake. A block is valid if it contains the hash of its predecessor. A valid blockchain contains only valid blocks.
A valid blockchain demonstrates an order of events. One cannot create a block without referring to the prior one. If the hashes are correct, we know that the blocks were created in sequential order, and therefore that the data stored on the chain was also written in that order. We know the relative order in which the data was written (we can’t generate a subsequent block without all the prior ones). We also know that the data has not changed since being written (changes to a block will change the hash, and require changes to all future ones).
Notably, we get no promises at all concerning validity or security. Merely storing information in a blockchain data structure does not make it correct, complete, or private. In fact, since most Blockchain systems are distributed ledgers (the topic of a future post), information on the chain is somewhat radically public. Every node in most Blockchain networks eventually see every piece of data on the chain.
Bitcoin and some (but not all) Blockchain systems up the ante on what constitutes a valid block by adding a nonce. The nonce is a value that, added to a block, yields a hash with specific and rare properties. This imposes a cost, called “proof-of-work,” on creating blocks. When creating a new block, authors must try (on average) a large number of nonces until they find one that yields a valid hash. The point of this is to make it computationally challenging merely to create a single new valid block at the end of the chain, and prohibitive to go back and corrupt earlier blocks.
The computational work of “mining” in the Bitcoin system is actually just searching for valid nonces. This is sufficiently different from conventional mining that it bears saying: In the usual use of the word “mining,” we are seeking out and refining a valuable resource. In Blockchain systems that use proof of work, the rare and precious resource at hand is the trustworthiness of the system itself. Value is not removed by the mining operation – it is actually being created.
Chris,
I’m enjoying reading your “deconstruction” of blockchain and look forward to future installments as this technology is on the cusp of being transformational. See for example the recent BBC article “Accenture and Microsoft give millions of refugees digital IDs – BBC News” http://www.bbc.com/news/technology-40341511
which I think is a good example of how blockchain can fundamentally change how our identities (and all the information that is identity based) can be globally managed.