396
X. Liu et al.
Since the publication of Satoshi Nakamoto’s Bitcoin paper, an overwhelming
amount of attention has been paid to Bitcoin and other similar digital currencies,
together with the technology used in the currency transfer systems. The enthusiasm
was due to the claimed advantages provided by Bitcoin: there is no need for a
middle man in the transaction process so trustless parties can do business with each
other; there is no central point of failure so system reliability is greatly enhanced;
there is no double-spending so fraud can be avoided; transaction history is traceable
so transactions can be verified; financial benefits are provided to participants and
they are rewarded for their contribution to the operation of the Bitcoin system, for
example, by mining blocks. In recent years, numerous Bitcoin-mining data centers
have been built around the world to make profits. Due to its enhanced security,
privacy, speed, and reduced cost, some organizations have started accepting Bitcoin
as a means of payment, such as tuition fees. Up to date, people have been primarily
focusing on the financial aspects of Bitcoin.
However, since 2014, greater attention has been paid to the technology which
Bitcoin is based on: blockchain. People have realized that blockchain can be
separated from Bitcoin and the technology can be beneficial to other areas where
data security and privacy are of prime importance. Quick surveys of the literature
have revealed that blockchain applications can be found in virtually every aspect
of our lives nowadays. For this reason, the business value of blockchain has been
predicted to be multibillion dollars by 2030.
8.1.3 Types of Blockchain
Blockchains are of different types. First of all, they can be permissionless or
permissioned.
8.1.3.1 Permissionless Blockchains
Permissionless blockchains are public, open source, and based on the Proof-ofWork consensus algorithm. Anybody can participate in a permissionless blockchain
without obtaining approval beforehand. The person can simply download the
required software program and start running it on his or her own computer. The
person can send transactions to the blockchain and these transactions will be
included in the blockchain only if they are valid. Transactions are transparent so
that everybody on the blockchain can view them, although the transactions are
anonymous. In addition, anybody can participate in validating transactions before
they are added to the blockchain. Well-known examples of public blockchains are
Bitcoin and Ethereum.
X. Liu et al.
Since the publication of Satoshi Nakamoto’s Bitcoin paper, an overwhelming
amount of attention has been paid to Bitcoin and other similar digital currencies,
together with the technology used in the currency transfer systems. The enthusiasm
was due to the claimed advantages provided by Bitcoin: there is no need for a
middle man in the transaction process so trustless parties can do business with each
other; there is no central point of failure so system reliability is greatly enhanced;
there is no double-spending so fraud can be avoided; transaction history is traceable
so transactions can be verified; financial benefits are provided to participants and
they are rewarded for their contribution to the operation of the Bitcoin system, for
example, by mining blocks. In recent years, numerous Bitcoin-mining data centers
have been built around the world to make profits. Due to its enhanced security,
privacy, speed, and reduced cost, some organizations have started accepting Bitcoin
as a means of payment, such as tuition fees. Up to date, people have been primarily
focusing on the financial aspects of Bitcoin.
However, since 2014, greater attention has been paid to the technology which
Bitcoin is based on: blockchain. People have realized that blockchain can be
separated from Bitcoin and the technology can be beneficial to other areas where
data security and privacy are of prime importance. Quick surveys of the literature
have revealed that blockchain applications can be found in virtually every aspect
of our lives nowadays. For this reason, the business value of blockchain has been
predicted to be multibillion dollars by 2030.
8.1.3 Types of Blockchain
Blockchains are of different types. First of all, they can be permissionless or
permissioned.
8.1.3.1 Permissionless Blockchains
Permissionless blockchains are public, open source, and based on the Proof-ofWork consensus algorithm. Anybody can participate in a permissionless blockchain
without obtaining approval beforehand. The person can simply download the
required software program and start running it on his or her own computer. The
person can send transactions to the blockchain and these transactions will be
included in the blockchain only if they are valid. Transactions are transparent so
that everybody on the blockchain can view them, although the transactions are
anonymous. In addition, anybody can participate in validating transactions before
they are added to the blockchain. Well-known examples of public blockchains are
Bitcoin and Ethereum.