are linked and secured by a cryptographic hash function. Before you close this article now, this is not as complex as it seems! A hash function is simply a mathematical fingerprint of the data in the block which accurately represents the data with a fixed length string of digits. In addition, you cannot work backwards from the hash to the underlying data - it is simply a unique ID. The slightest change to any information in the block will result in a totally different fingerprint or hash. In a blockchain, each new block contains the hash of the previous block and so on, as new blocks are added. As a result, any change to an earlier block will totally invalidate the accuracy of all subsequent blocks. This, coupled with the multiple identical copies of the database that are in existence, means that any attempt to change any element of data in the historical record would require massive new calculations involving the majority of participants in the blockchain. As they are all independent entities, in practice this cannot happen. This therefore gives the blockchain its key advantage as the underpinning of a currency system - once a transaction has been included in a new block of data and has been agreed by a majority of the participants to be accurate, that transaction and that block of data cannot be changed. In effect, an immutable record of historical transactions has been created without the involvement of a managing entity such as a national bank or large company. Just before we leave this piece of the history, it is important to recognize that blockchain technology can be operated under two distinct models: the public and private blockchain models. This first blockchain model, which supports Bitcoin and similar currencies, is known as permissionless. This is a public, open structure operated by large numbers of independent players and with no access
control or central ownership. New applications can be adopted on the blockchain without permission essentially using the blockchain as a “transport layer.” The second approach is a private permissioned blockchain where a specific entity - a single or group of companies or government (s) - create and operate a blockchain for internal use, or externally with the trust of other parties. This is the basis of some privately generated cryptocurrencies such as Ripple, but more importantly is an approach that many of the big international banks are exploring for internal or industry managed use cases. Indeed, this could be a preferred model for the international telecom industry and wholesalers to automate elements of their business. THE TODDLER The first blockchain version was launched to support Bitcoin and was simple in structure to just enable to tracking of spending of each Bitcoin that had been mined. The process of creating new bitcoins was termed “mining” and was the reward to all the participants in the network for running the complex cryptographic algorithms that were supporting the creation of the blockchain. Using this models, miners or the servers used to process the bitcoins, get paid partly through a transaction fee (paid by the Bitcoin seller) and through the allocation of new Bitcoins in payment for their mining services. In 2014 however, new extensions to the basic design started to appear with the capability to add “if this, then that” type programs to the blockchain. These were also known as smart contracts, so that two people could agree, for instance, that if one transfers the title document to a car to the other, then a transfer of “cash” would immediately occur between the parties.
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