Blockchain Exam 1 Study Guide

Blockchain Exam 1 Study Guide What is Blockchain? - It's an immutable record of digital events shared peer to peer between different parties. It can only be updated by consensus of a majority of the participants in the system and, once entered, information is very hard to erased. It revolutionizes the concept of data storage. How did blockchain get discovered? - Right after the Global Financial Crisis when people lost faith in the banks, Satoshi Nakamoto solved a very complex Game Theory conundrum called the Byzantine General Problem, which ensured that at a particular time, a block of asset could be transferred to only one other person, without the need for a third-party check. Byzantine General Problem - a situation where involved parties must agree on a single strategy in order to avoid complete failure, but where some of the involved parties are corrupt and disseminating false information or are otherwise unreliable. 7 key principles of why people chose to use blockchain? - -Transparent & visable (no one can cover their tracks) -Accountability (every action is attributable to its owner) -privacy (security is given without having to provide confidential user info) -Scalaibility (must be able to scale to trillions of digital assets) -Portability(security moves with data wherever data goes) -permanence (security last as long as data does, ideally longer) -open (doesn't rely on traditional closed trust anchors) Block chains are what type of ledgers? - Distributed ledgers Distributed ledger - a database that is consensually shared and synchronized across multiple sites, institutions or geographies. It allows transactions to have public "witnesses," thereby making a cyberattack more difficult. The participant at each node of the network can access the recordings shared across that network and can own an identical copy of it. public ledger - -is used as a record keeping system that maintains participants' identities in secure and (pseudo-)anonymous form, their respective cryptocurrency balances, and a record book of all the genuine transactions executed between network participants. -transactions are placed in blocks which are linked by SHA256 hashes Difference between centralized, decentralized and distributed - -Centralized: One database, one owner, not resilient to organizational failures, resilient to tech failures -Distributed: Many database copies, one owner, resilient to tech failure, not resilient to organizational failure - Decentralized: many database copies, many owners, no one is the "master", resilient to tech failure, resilient to organizational failure Block chain has what type of ledger? - Chronological Ledger -Transactions are pseudo anonymous -transactions grouped in blocks -transactions are logged and stamped with info about time, amount and participants Pseudo-anonymous - Most commonly, pseudo-anonymity enables anonymous posting and commenting. Pseudo-anonymous users have no visible identifier, and information that can be linked to them is only available to service providers or site administrators (unless the users themselves provide such information in their messages). However, that doesn't mean that messages can't be traced back to their sources. Users are generally required to provide some form of ID for sign up and IP addresses are typically logged and saved. Miners - Indviduals that maintain and update the blockchain and are paid a reward -solve complex math problem -send transactions to other nodes to be verified What confirms that the block, and every block before it, is legit? - unbroken hash (seal) Common complaints about blockchain - -underdeveloped ecosystem -moving assets to blockchain could be hard -few poster companies -lack of understanding -trusting networks