Blockchains

When you book a train ticket or transfer money at a bank, your transaction is recorded in a centralised database: all the data sits in one central location, and transactions are updated on it one by one. That is how ticket booking websites and banks traditionally operate. The weakness is built into the design — because everything is stored in one central place, there are real chances of the data being hacked or lost.

The blockchain idea: decentralise the database

Blockchain technology answers this by working on the concept of a decentralised and shared database, where each computer in the network has its own copy of the database. There is no single central store to attack or to fail.

The unit of this system is the block — think of it as a secured chunk of data, or one valid transaction. Every block has two parts:

• a header, which is visible to every other node in the network, and
• private data, which only the owner of the block can access.

Blocks link together to form a chain — the blockchain — as shown in Figure 2.14.

Blockchain as a shared ledger

A blockchain can be defined as a system that allows a group of connected computers to maintain a single updated and secure ledger. Each computer, or node, participating in the blockchain receives a full copy of the database.

The ledger it maintains is "append only": new entries can be added, but existing ones cannot be rewritten. Crucially, an update happens only after all the nodes within the network authenticate the transaction. Safety and security follow directly from this design — since every member of the network keeps a copy of the blockchain, it is not possible for any single member to make changes or alter the data. Tampering with one copy achieves nothing when every other node holds the honest version.

Where blockchains are used

The most popular application of blockchain technology is digital currency. But its decentralised nature, combined with openness and security, makes it attractive wherever transparency, accountability and efficiency matter — in business and in governance systems alike:

• Healthcare — better data sharing between healthcare providers raises the probability of accurate diagnosis, enables more effective treatments, and increases the overall ability of healthcare organisations to deliver cost-effective care.
• Land registration records — recording ownership on a blockchain can avoid the many disputes that arise from land ownership claims and encroachments. …