If you attend a blockchain meetup/conference and ask 100 people what they think a blockchain is, one of the following will happen:

80 will say they simply do not know. Maybe their boss sent them or they have read about it in the Wall Street Journal or the New York Times and they thought it was cool. Some of them may be legitimately interested in the subject, however odds are that most are just following the hypetrain. 20 will claim they are experts and they have been working with it since 2007 (bitcoin was created in the end of 2008). Of course they each have a different definition.

The above is fiction and should not be taken seriously. I have not been to any blockchain meetups or conferences as of yet. However, by the amount of different definitions seen on the internet, some partial truth can be found in those words. Things get even more interesting when the “public versus private/permissioned blockchain” debate heats up.

Disclaimer: We are going to be refering only to public blockchains for the rest of this post. This is not going to be a “how does a blockchain work” post as there are already a lot of good articles online on that topic (and a lot of bad ones).

First of all, to describe what a blockchain is, let’s define what a database is:

A database is an organized collection of data — Wikipedia

My definition of a blockchain:

A blockchain is a database that can be shared between a group of non-trusting individuals, without needing a central party to maintain the state of the database.

It is also often referred to by the name “Distributed Ledger Technology”, DLT for short.

Centralised vs Distributed Ledger, image source: https://cdn.ripple.com/wp-content/uploads/2015/06/ledgers.png

Properties of A Blockchain

Transparency: Every transaction can be inspected by anyone (keyword: block explorer )

) Decentralization: Every node which maintains the network has a copy of the ledger. That creates redundancy and fault tolerance (i.e if a node fails or stops working, the rest of the nodes can keep maintaining the network without interruption).

Decentralization along with proper mechanisms to ensure that no faulty transactions get included in the ledger give birth to data integrity, the so-called immutability of the blockchain that everyone talks about. When a piece of information gets recorded, it is set in stone and cannot be rewritten (exceptions: hard fork,chain split).

Add transparency and decentralization together and you have a ledger which has 100% uptime, cannot be manipulated by powerful adversaries to their advantage (debatable) and is fully inspectable at any time.

Every single property of a blockchain on its own might not sound like too remarkable, however when combined together, new properties appear which in turn create the possibility for new revolutionary use cases.

Before we get into that, let’s clear some…

Common Misconsceptions

“Blockchains provide security”

This one is tricky, because security is often confused with confidentiality. A blockchain does not provide confidentiality (with the exception of cases like Zcash, Monero, Dash, PIVX which are blockchains with built-in privacy features).

“My business needs a blockchain!”

Definitely not true. If trust and robustness aren’t an issue, there’s nothing a blockchain can do that a regular database cannot. In this case you are better off with a traditional centralized database with proper backups.

“Blockchain is Bitcoin”

Bitcoin was the first of the “cryptocurrencies” that introduced blockchain technology as we know it today. Currently there are numerous different blockchains linked to different projects, each offering something unique atop the basic blockchain principles.

…And more