It all starts with a Hash. A blockchain starts with a hash, which is a digital fingerprint. No matter how much or how little data you put in the original hash you get a different hash number. For example, if the data is the letter “a” or the US Constitution the hash will be different, but for the purposes of the change in data from “a” to the US Constitution it will be unique to the data. In other words, if you typed an “a” as the data with in a block, then erased the “a” and typed the entire US Constitution, then erased the entire US Constitution and retyped “a”, the same hash that appeared when you originally typed “a” would appear when you retyped “a”. The Hash is the concatenation of the data. While the “a” within the data will always create the same hash, you couldn’t figure out the data within a block by looking at the hash. More specifically, if you saw a hash (which is 43 characters) you would never be able to tell what the data is. Although it may not jump out at you, blockchain is meant to give you confidence that the data has not been altered.
A blockchain typically consists of a Block #, a Nonce, data, the previous hash and a newfound hash. If there was an existing blockchain and someone attempted to change the data there would be a break in the chain, which would mean that every block after break in the chain no longer has the same hash.
Blockchain is the new trust layer on the internet enabled by technology. Blockchain allows programmers to do new and interesting things once the users accept that the security exists. Although blockchain is undoubtedly secure the perception of security is still difficult to accept. The more blocks there are, the more confident you can be that the data held within the blockchain will not be subverted out from under you. A blockchain can have billions and trillions of blocks but it will always have a signifying hash. If the blocks forks/breaks democracy decides.
People and crypto wallets can be represented by their public key within a blockchain. The Public key is really just an encrypted private key, but in terms of the blockchain, it is a defining piece of authority. Similar to the “a” vs. US Constitution example, if someone were to attempt to change a public key which represented data or ownership of cryptocurrency on the blockchain, the blockchain would immediately notice because the hashes would no longer align. Blockchain through the decentralized electronic ledger allows for secure and reliable tracking of the ownership and transfer of each individual unit of the crypto-asset.
Mass institutional adoption is only a matter of time, which will carry with it legal and regulatory issues. If you would like to discuss the current regulatory map or the legal issues surrounding blockchain please call my office.