- Blockchain definition
- TECHNICAL: Back-end database that maintains a distributed ledger, openly.
- BUSINESS: Exchange network for moving value between peers.
- LEGAL: A transaction validation mechanism, not requiring intermediary assistance.
- Blockchain = Software Engineering + Game Theory + Cryptography Science
- Game theory
is ‘the study of mathematical models of conflict and cooperation between intelligent rational decision-makers.” Bitcoin blockchain, originally conceived by Satoshi Nakamoto, had to solve a known game theory conundrum called the Byzantine Generals Problem.
- Solving that problem consists in mitigating any attempts by a small number of unethical Generals who would otherwise become traitors, and lie about coordinating their attack to guarantee victory. This is accomplished by enforcing a process for verifying the work that was put into crafting these messages, and time-limiting the requirement for seeing untampered messages in order to ensure their validity.
- rests on hashing, public/private keys, and digital signatures.
- Game theory is ‘the study of mathematical models of conflict and cooperation between intelligent rational decision-makers.” Bitcoin blockchain, originally conceived by Satoshi Nakamoto, had to solve a known game theory conundrum called the Byzantine Generals Problem.
- Decentralized Consensus
- Proof-of-Work (POW) -
- BitCoin initiated this. Based on Practical Byzantine Fault Tolerance
- is NOT environmentally friendly, because it requires large amounts of processing power from specialized machines that generate excessive energy.
- Proof-of-Stake (POS)
- algorithm which relies on the concept of virtual mining and token-based voting, a process that does not require the intensity of computer processing as the POW, and one that promises to reach security in a more cost-effective manner.
- Other consensus protocols: Raft, Paxos, DPOS (Delegated POS)
- Proof-of-Work (POW) -
When discussing consensus algorithm, you need to consider the permissioning method, which determines who gets to control and participate in the consensus process. The 3 popular choices for the type of permissioning are:
- Public (e.g., POW, POS, Delegated POS)
- Private (uses secret keys to establish authority within a confined blockchain)
Semi-private (e.g., consortium-based, uses traditional Byzantine Fault Tolerance in a federated manner)
- Ethereum - smart contract
- Digital Asset Holding - R6 - Corda
- Merkel tree
- 21,000,000 is the max of bitcoins that can ever be mined - what does that mean and why?
- DAO - Distributed Autonomous Organization
- The Business Blockchain