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Frequently asked questions about Blockchain Technologies | Artificial Intelligence | Data Science
- What is a blockchain?
A blockchain is a distributed, cryptographically-secure database structure that allows network participants to establish a trusted and immutable record of transactional data without the need for intermediaries. A blockchain can execute a variety of functions beyond transaction settlement, similarly smart contracts. Smart contracts are digital agreements embedded in code.
Blockchains have proven themselves most noteworthy superior solutions for securely coordinating data, but they are capable of much more. Similarly, tokenization, incentive design, attack-resistance, and reducing counterparty risk. The very first blockchain was the Bitcoin blockchain, while itself was a culmination of over a century of advancements in cryptography and database technology.
- What is blockchain software?
Blockchain software is like any other software. Making it available to almost anyone to use or change bitcoin was released as open source software. There are a wide variety of efforts across the blockchain ecosystem for the reason to improve upon Bitcoin’s original software. Ethereum has its own open source blockchain software. Some blockchain software is proprietary and not available to the public.
- What is a blockchain database?
Historically, databases have incorporated a centralized client-server architecture, in which a sole authority controls the central server. This design means that data security, alteration, and deletion rests with a single point of failure. The decentralized architecture of blockchain databases emerged as a solution for many of the weaknesses of centralized database architecture. A blockchain network consists of a large number of distributed nodes — voluntary participants who must reach consensus and maintain a single transactional record together.
- What is a blockchain system?
A blockchain system refers to all the aspects and features that go into a particular blockchain, everything from the consensus algorithm to the state machine to cryptographic functions. As Andreas Antonopoulus and Gavin Wood note in Mastering Ethereum, there are “a huge variety of blockchains with different properties” — qualifiers “help us understand the characteristics of the blockchain in question, such as open, public, decentralized, neutral, and censorship-resistant.”
- How does a blockchain work?
When a digital transaction occurs in a blockchain network, it is grouped together in a cryptographically-secure “block” with other transactions that have occurred in the same time frame. The block is broadcast to the network. A blockchain network is comprised of nodes or participants who validate and relay transaction information. The block of transactions is verified by participants called miners, who use computing power to solve a cryptographic puzzle and validate the block of transactions. The first miner to solve and validate the block is rewarded. Each verified block is connected to the previously verified block, creating a chain of blocks. One important cryptographic underpinning of blockchains is the hash function. Hashing assigns a fixed value to a string which is inputted into the system. Blockchain hashing power results in a deterministic, quickly-computable, and preimage-resistant system. Explore our knowledge base to learn more about how a blockchain works.
- What is a blockchain application?
Blockchain applications are comparable to conventional software applications, except they implement a decentralized architecture and cryptoeconomic systems to increase security similarly foster trust, tokenize assets, and design new network incentives. Here are over 90 Ethereum apps that are currently being used across the Ethereum blockchain ecosystem, from prediction markets to smart legal agreements.
- What are the benefits of blockchain technology?
Blockchain technology also has a wide variety of benefits for both global enterprises and local communities. The most commonly cited benefits of a blockchain is trusted data coordination, attack-resistance, shared IT infrastructure, tokenization, and built-in incentivization.