Blockchain Primer: Introduction to Blockchain Foundations and Implementation

Introduction

Blockchain technology has rapidly become a disruptive technology for a host of industries including finance, healthcare, real estate, and more, thanks to its ability to assure data privacy, ownership protection, and manage huge volumes of data.

The first realization of blockchain began in 2009 with cryptocurrencies, particularly, the Bitcoin blockchain, a secure, peer-to-peer digital monetary system (Wallac, 2011). Since then, numerous other manifestations of blockchain technology have emerged ranging from securely transferring medical data (Burstiq, 2021) to automating and securing real estate transaction (Propy, 2021) and to identity and credential management (Evernym, 2021).

Simply put, a blockchain is a distributed growing network of data records, called blocks (Narayanan et al., 2016). Figure 1 shows a simplified version of a chain of blocks. Each block consists of the stored data as well as the data and time the data was stored (timestamp). Further, a block is uniquely identified by a hash code. Moreover, a block refers to the previous block using the previous hash code. The first block, also called the Genesis block, has no predecessor, and thus, it does not contain a previous hash attribute.

Figure 1.

An illustration of a chain of blocks

The purpose of this chapter is to introduce the reader to the foundations of the blockchain technology by answering the following research questions (RQ) using the literature:

• 1.

  RQ1: What type of cryptography does the blockchain technology use to protect data?

• 2.

  RQ2: How does the blockchain technology manage and tamperproof distributed data?

• 3.

  RQ3: How does the blockchain technology facilitate transactional contracts?

• 4.

  RQ4: How can we present a minimal case study that explains the implementation of a blockchain?

To answer the first question, we identified literature presenting foundational cryptography used by the blockchain technology. In short, blockchain uses an algorithm to calculate the hash codes. The value of the code depends on the data in the block (timestamp, data, etc.). As such, the generated code varies from block to block. Blockchain uses this mechanism to prevent data tampering (Al-Kuwari et al., 2011). For instance, assuming an attacker could change the data in Block 2. Accordingly, the hash of the block would also change. However, Block 3 would still refer to the old hash code of Block 2. As a result, this would make Block 3, and all succeeding blocks invalid since they do not contain the correct hash of the previous block. This concept is discussed in more detail in the section titled as “Cryptography in Blockchain”.