Blockchain and Bitcoin: Concept, Functionality, and Security

Blockchain and Bitcoin: Concept, Functionality, and Security

Hayden Covington, Young B. Choi
Copyright: © 2019 |Pages: 11
DOI: 10.4018/IJCRE.2019010103
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Abstract

Bitcoin and blockchain are two new and innovative technologies that may be confusing. This purpose of this paper is to differentiate these two new technologies and explain their functionalities. The concept of Bitcoin “mining” will be addressed, as well as the impact it has had on the hardware market. Finally, the benefits and concerns of implementing blockchain and Bitcoin will be provided. Despite the concerns, both blockchain and Bitcoin provide a plethora of possible new technological advanced, both in the terms of digital currencies as well as other avenues.
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Blockchain

While the innovations of Blockchain sound impressive, they will truly be realized once the full functionality of Blockchain is explained.

Perhaps the most beneficial use of Blockchain is its universal ledger. The universal ledger introduced by Blockchain avoids the separate transactional ledgers kept by companies; when companies strike a deal, each ledger has to be updated on each side, sometimes over multiple accounts (Cachin, 2017). In addition - to update many different ledgers, when intermediaries are involved, they introduce fees which increases the expense to the business (Gupta, 2017).

Blockchain solves this through the introduction of a universal ledger. Each “block” of Blockchain is distributed, running on many different computers. However, the computers aren’t just limited to a company that “owns” Blockchain; Blockchain is collaborative, and the distribution is done across numerous users around the globe (Tapscott & Tapscott, 2016).

Through the distributed computing, transactions are computed. Then, every ten minutes, all transactions that have been conducted are cleared and verified, after which they are stored in a “block.” Each new block is linked to the previous block; without the block being linked to the previous, it is invalid. These blocks are permanently time-stamped and documented as to the various exchanges, making it incredibly difficult for anyone to ever alter the transactions in the ledger that have occurred (Tapscott & Tapscott, 2016).

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