Block Chain

Overview

Block Chain is the technology that powers Bitcoin. It gets its name due to the fact that it organizes its data (in this case a ledger, see below) in blocks of information that are linked together in sequential order.

The blockchain was created as a way to eliminate the need for a trusted third party in transactions. As an example, when a person spends money on a credit card, the bank acts as a trusted third party between the purchaser and the product vendor.

The block creates way to record transactions between two parties in a secure, robust, and authenticated manner without relying on a trusted third party and also maintaining the anoymity of the parties involved.

User Authentication

The blockchain depends on public/private key encryption to authenticate users and transactions. (see also encryption)

Each on the block chain must have a public/private key. The public key is made public to the blockchain. When a user executes a transaction, the transaction is signed with the users private key, and in this way, the block chain is able to verify the source of the transaction.