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The Fundamentals and Future of Blockchain and Bitcoin: Part 2 of 4

In Part 1, I narrowed the problem set of blockchain to proof of ownership in order to create a value proposition context from which to understand the purpose of the technology. This next part begins to explain how the specific technical implementation of blockchain works.

The Immutable Distributed Public Ledger

The word blockchain evokes its fundamental structure. It is a chain of blocks (of data) connected in sequence. The sequence is defined by a reference in each block to the block that came before it. For example, if there is a block alpha, and a block beta, and a block zed, each block contains a reference to the block before it. If someone hands me block zed, and I find written on it, “comes after beta,” I know that I need beta to complete the chain, and when I get that, I likewise know I need alpha. But how do I know that someone did not erase the reference and write a reference on it that inserts the block into a different part of the chain? If there’s other data on the block (of course there is, that’s the point) how do I know they did not edit it?

This is where cryptography plays an important role. We typically think of cryptology in terms of hiding data, but in this case it serves a different purpose. Cryptography that hides data for that purpose must also be able to unhide it. We call this reversible encryption. Another type of encryption is one-way. It is intended to completely and irreversibly disguise data. We call this a cryptographic hash, or just hash. A key feature of a hash, or really a