Blockchain Technology 101
What is a Blockchain?
Blockchain technology is a revolutionary concept, it is the main driving force behind Bitcoin and all other cryptocurrencies. In simple terms it consists of a list of records that are chained together using cryptography. Those records can take any form; a transaction, ownership, or any other form of data. What gives blockchain its magic and separates it from any other traditional database is that once a record is stored on the blockchain it cannot be altered, reversed or manipulated in any sort of way. Consensus protocols differ from one blockchain to another, but the core principles are similar, a record is only valid if the whole ecosystem agrees to it, whether it is direct or indirect.
There is a good reason why big corporations such as IBM, Microsoft and Facebook are rushing to adopt and implement blockchain technology.
Types of Blockchain
- Public Blockchain: A public blockchain is a permissionless system, it stems from the original vision of Bitcoin where anyone can join the blockchain and participate in its ecosystem. It is fully transparent, open source and decentralized. A perfect system for currencies since it is based on a trustless environment and self-governance.
- Private Blockchain: A private blockchain is quite the opposite of a public blockchain, it is more focused on institutions or businesses since the owner of the blockchain is the validator and the one that governs user read/write access. In its true sense it is not decentralized, however private blockchains tend to be more scalable, faster but may be less secured.
- Hybrid Blockchain: A hybrid blockchain is a mix between a public and a private blockchain it benefits from the speed of private blockchains and security of public blockchains. It is semi-decentralized, and is also more focused on instutitions especially in the e-commerce sector.
- DAG: DAG or Directed Acyclic graph is an experimental system that also uses a distributed ledger however transactions are not processed in a linear form similar to how blockchains work, instead they are processed in multiple directions, which in theory might make transactions much faster and feeless.