June 16, 2016
In my latest LTP article, I have attempted to provide high-level and (hopefully) user-friendly enough (i.e., not requiring high-tech knowledge) overview of the underlying cryptography behind blockchain and how it is used to ensure the immutability of the resulting database that can be safely shared between parties unknown to each other, without fear that it can be manipulated inadvertently.
There are many blockchain implementations in existence today, but bitcoin was the first and still is the most significant and the most successful one. It has been proven—in extensive real-life exploitation so far—as a very robust and fraud-resistant solution. Many non-payment use cases have also been implemented on top of the same basic bitcoin blockchain infrastructure, which proves it is also fairly flexible. For that reason, I believe that the good initial understanding of the bitcoin inner workings can be the perfect basis for understanding every other blockchain implementation and its potential.
Let’s review now—again staying at fairly high level—how the bitcoin payment protocol functions on top of the underlying blockchain database content. Again, I am not going to spend much time diving into all of the details of how bitcoin consensus is executed, managed and reached, but instead will spend most of the time focusing on explaining:
Bitcoin transaction messages are the main content of the bitcoin blockchain database. They are commands for the monetary value transfer, usually between a pair of bitcoin ecosystem participants, only identified via their ‘bitcoin address’. Every participant is required to have the complementary key pair, which they generate using standard tools. The key pair consists of secret key (‘sk’) and public key ...