The history of blockchain and Bitcoin

Blockchain was introduced with the invention of Bitcoin in 2008. Its practical implementation then occurred in 2009. For the purposes of this chapter, it is sufficient to review Bitcoin very briefly, as it will be explored in great depth in Chapter 5, Introducing Bitcoin. However, it is essential to refer to Bitcoin because, without it, the history of blockchain is not complete.

Electronic cash

The concept of electronic cash or digital currency is not new. Since the 1980s, e-cash protocols have existed that are based on a model proposed by David Chaum.

Just as understanding the concept of distributed systems is necessary to comprehend blockchain technology, the idea of electronic cash is also essential in order to appreciate the first and astonishingly successful application of blockchain, Bitcoin, or more broadly cryptocurrencies in general.

Two fundamental e-cash system issues need to be addressed: accountability and anonymity.

Accountability is required to ensure that cash is spendable only once (double-spend problem) and that it can only be spent by its rightful owner. Double spend problem arises when same money can be spent twice. As it is quite easy to make copies of digital data, this becomes a big issue in digital currencies as you can make many copies of same digital cash. Anonymity is required to protect users' privacy. As with physical cash, it is almost impossible to trace back spending to the individual who actually paid the money.

David Chaum solved both of these problems during his work in 1980s by using two cryptographic operations, namely blind signatures and secret sharing. These terminologies and related concepts will be discussed in detail in Chapter 3, Symmetric Cryptography and Chapter 4, Public Key Cryptography. For the moment, it is sufficient to say that blind signatures allow for signing a document without actually seeing it, and secret sharing is a concept that enables the detection of double spending, that is using the same e-cash token twice (double spending).

In 2009, the first practical implementation of an electronic cash (e-cash) system named Bitcoin appeared. The term cryptocurrency emerged later. For the very first time, it solved the problem of distributed consensus in a trustless network. It used public key cryptography with a Proof of Work (PoW) mechanism to provide a secure, controlled, and decentralized method of minting digital currency. The key innovation was the idea of an ordered list of blocks composed of transactions and cryptographically secured by the PoW mechanism. This concept will be explained in greater detail in Chapter 5, Introducing Bitcoin.

Other technologies used in Bitcoin, but which existed before its invention, include Merkle trees, hash functions, and hash chains. All these concepts are explained in appropriate depth in Chapter 4, Public Key Cryptography.

Looking at all the technologies mentioned earlier and their relevant history, it is easy to see how concepts from electronic cash schemes and distributed systems were combined to create Bitcoin and what now is known as blockchain. This concept can also be visualized with the help of the following diagram:

The various ideas that supported the invention of Bitcoin and blockchain

Blockchain

In 2008, a groundbreaking paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System was written on the topic of peer-to-peer electronic cash under the pseudonym Satoshi Nakamoto. It introduced the term chain of blocks. No one knows the actual identity of Satoshi Nakamoto. After introducing Bitcoin in 2009, he remained active in the Bitcoin developer community until 2011. He then handed over Bitcoin development to its core developers and simply disappeared. Since then, there has been no communication from him whatsoever, and his existence and identity are shrouded in mystery. The term chain of blocks evolved over the years into the word blockchain.

As stated earlier, blockchain technology incorporates a multitude of applications that can be implemented in various economic sectors. Particularly in the finance sector, significant improvement in the performance of financial transactions and settlements is seen as resulting in desirable time and cost reductions. Additional light will be shed on these aspects of blockchain in Chapter 17, Blockchain – Outside of Currencies where practical use cases will be discussed in detail for various industries. For now, it is sufficient to say that parts of nearly all economic sectors have already realized the potential and promise of blockchain and have embarked, or will do so soon, on the journey to capitalize on the benefits of blockchain technology.

Blockchain defined

Layman's definition: Blockchain is an ever-growing, secure, shared record keeping system in which each user of the data holds a copy of the records, which can only be updated if all parties involved in a transaction agree to update.
Technical definition: Blockchain is a peer-to-peer, distributed ledger that is cryptographically-secure, append-only, immutable (extremely hard to change), and updateable only via consensus or agreement among peers.

Now let's examine the preceding definitions in more detail. We will look at all keywords in the definitions one by one.

Peer-to-peer

The first keyword in the technical definition is peer-to-peer. This means that there is no central controller in the network, and all participants talk to each other directly. This property allows for cash transactions to be exchanged directly among the peers without a third-party involvement, such as by a bank.

Distributed ledger

Dissecting the technical definition further reveals that blockchain is a distributed ledger, which simply means that a ledger is spread across the network among all peers in the network, and each peer holds a copy of the complete ledger.

Cryptographically-secure

Next, we see that this ledger is cryptographically-secure, which means that cryptography has been used to provide security services which make this ledger secure against tampering and misuse. These services include non-repudiation, data integrity, and data origin authentication. You will see how this is achieved later in Chapter 3, Symmetric Cryptography which introduces the fascinating world of cryptography.

Append-only

Another property that we encounter is that blockchain is append-only, which means that data can only be added to the blockchain in time-ordered sequential order. This property implies that once data is added to the blockchain, it is almost impossible to change that data and can be considered practically immutable. Nonetheless, it can be changed in rare scenarios wherein collusion against the blockchain network succeeds in gaining more than 51 percent of the power. There may be some legitimate reasons to change data in the blockchain once it has been added, such as the right to be forgotten or right to erasure (also defined in General Data Protection (GDPR) ruling, https://gdpr-info.eu/art-17-gdpr/).

However, those are individual cases that need to be handled separately and that require an elegant technical solution. For all practical purposes, blockchain is indeed immutable and cannot be changed.

Updateable via consensus

Finally, the most critical attribute of a blockchain is that it is updateable only via consensus. This is what gives it the power of decentralization. In this scenario, no central authority is in control of updating the ledger. Instead, any update made to the blockchain is validated against strict criteria defined by the blockchain protocol and added to the blockchain only after a consensus has been reached among all participating peers/nodes on the network. To achieve consensus, there are various consensus facilitation algorithms which ensure that all parties are in agreement about the final state of the data on the blockchain network and resolutely agree upon it to be true. Consensus algorithms are discussed later in this chapter and throughout the book as appropriate.

Blockchain can be thought of as a layer of a distributed peer-to-peer network running on top of the internet, as can be seen in the following diagram. It is analogous to SMTP, HTTP, or FTP running on top of TCP/IP.

The network view of a blockchain

At the bottom layer in the preceding diagram, there is the internet, which provides a basic communication layer for any network. In this case, a peer-to-peer network runs on top of the internet, which hosts another layer of blockchain. That layer contains transactions, blocks, consensus mechanisms, state machines, and blockchain smart contracts. All of these components are shown as a single logical entity in a box, representing blockchain above the peer-to-peer network. Finally, at the top, there are users or nodes that connect to the blockchain and perform various operations such as consensus, transaction verification, and processing. These concepts will be discussed in detail later in this book.

From a business standpoint, a blockchain can be defined as a platform where peers can exchange value / electronic cash using transactions without the need for a centrally-trusted arbitrator. For example, for cash transfers, banks act as a trusted third party. In financial trading, a central clearing house acts as an arbitrator between two trading parties. This concept is compelling, and once you absorb it, you will realize the enormous potential of blockchain technology. This disintermediation allows blockchain to be a decentralized consensus mechanism where no single authority is in charge of the database. Immediately, you'll see a significant benefit of decentralization here, because if no banks or central clearing houses are required, then it immediately leads to cost savings, faster transaction speeds, and trust.

A block is merely a selection of transactions bundled together and organized logically. A transaction is a record of an event, for example, the event of transferring cash from a sender's account to a beneficiary's account. A block is made up of transactions, and its size varies depending on the type and design of the blockchain in use.

A reference to a previous block is also included in the block unless it is a genesis block. A genesis block is the first block in the blockchain that is hardcoded at the time the blockchain was first started. The structure of a block is also dependent on the type and design of a blockchain. Generally, however, there are just a few attributes that are essential to the functionality of a block: the block header, which is composed of pointer to previous block, the timestamp, nonce, Merkle root, and the block body that contains transactions. There are also other attributes in a block, but generally, the aforementioned components are always available in a block.

A nonce is a number that is generated and used only once. A nonce is used extensively in many cryptographic operations to provide replay protection, authentication, and encryption. In blockchain, it's used in PoW consensus algorithms and for transaction replay protection.

Merkle root is a hash of all of the nodes of a Merkle tree. Merkle trees are widely used to validate the large data structures securely and efficiently. In the blockchain world, Merkle trees are commonly used to allow efficient verification of transactions. Merkle root in a blockchain is present in the block header section of a block, which is the hash of all transactions in a block. This means that verifying only the Merkle root is required to verify all transactions present in the Merkle tree instead of verifying all transactions one by one. We will elaborate further on these concepts in Chapter 4, Public Key Cryptography.

The generic structure of a block.

This preceding structure is a simple block diagram that depicts a block. Specific block structures relative to their blockchain technologies will be discussed later in the book with greater in-depth technical detail.

Generic elements of a blockchain

Now, let's walk through the generic elements of a blockchain. You can use this as a handy reference section if you ever need a reminder about the different parts of a blockchain. More precise elements will be discussed in the context of their respective blockchains in later chapters, for example, the Ethereum blockchain. The structure of a generic blockchain can be visualized with the help of the following diagram:

Generic structure of a blockchain

Elements of a generic blockchain are described here one by one. These are the elements that you will come across in relation to blockchain:

• Address: Addresses are unique identifiers used in a blockchain transaction to denote senders and recipients. An address is usually a public key or derived from a public key. While addresses can be reused by the same user, addresses themselves are unique. In practice, however, a single user may not use the same address again and generate a new one for each transaction. This newly-created address will be unique. Bitcoin is, in fact, a pseudonymous system. End users are usually not directly identifiable, but some research in removing the anonymity of Bitcoin users has shown that they can be identified successfully. A good practice is for users to generate a new address for each transaction in order to avoid linking transactions to the common owner, thus preventing identification.
• Transaction: A transaction is the fundamental unit of a blockchain. A transaction represents a transfer of value from one address to another.
• Block: A block is composed of multiple transactions and other elements, such as the previous block hash (hash pointer), timestamp, and nonce.
• Peer-to-peer network: As the name implies, a peer-to-peer network is a network topology wherein all peers can communicate with each other and send and receive messages.
• Scripting or programming language: Scripts or programs perform various operations on a transaction in order to facilitate various functions. For example, in Bitcoin, transaction scripts are predefined in a language called Script, which consist of sets of commands that allow nodes to transfer tokens from one address to another. Script is a limited language, however, in the sense that it only allows essential operations that are necessary for executing transactions, but it does not allow for arbitrary program development. Think of it as a calculator that only supports standard preprogrammed arithmetic operations. As such, Bitcoin script language cannot be called Turing complete. In simple words, Turing complete language means that it can perform any computation. It is named after Alan Turing who developed the idea of Turing machine that can run any algorithm however complex. Turing complete languages need loops and branching capability to perform complex computations. Therefore, Bitcoin's scripting language is not Turing complete, whereas Ethereum's Solidity language is.

To facilitate arbitrary program development on a blockchain, Turing complete programming language is needed, and it is now a very desirable feature of blockchains. Think of this as a computer that allows development of any program using programming languages. Nevertheless, the security of such languages is a crucial question and an essential and ongoing research area. We will discuss this in greater detail in Chapter 5, Introducing Bitcoin, Chapter 9, Smart Contracts, and Chapter 13, Development Tools and Frameworks, later in this book.

• Virtual machine: This is an extension of the transaction script introduced earlier. A virtual machine allows Turing complete code to be run on a blockchain (as smart contracts); whereas a transaction script is limited in its operation. However, virtual machines are not available on all blockchains. Various blockchains use virtual machines to run programs such as Ethereum Virtual Machine (EVM) and Chain Virtual Machine (CVM). EVM is used in Ethereum blockchain, while CVM is a virtual machine developed for and used in an enterprise-grade blockchain called Chain Core.
• State machine: A blockchain can be viewed as a state transition mechanism whereby a state is modified from its initial form to the next one and eventually to a final form by nodes on the blockchain network as a result of a transaction execution, validation, and finalization process.
• Node: A node in a blockchain network performs various functions depending on the role that it takes on. A node can propose and validate transactions and perform mining to facilitate consensus and secure the blockchain. This goal is achieved by following a consensus protocol (most commonly PoW). Nodes can also perform other functions such as simple payment verification (lightweight nodes), validation, and many other functions depending on the type of the blockchain used and the role assigned to the node. Nodes also perform a transaction signing function. Transactions are first created by nodes and then also digitally signed by nodes using private keys as proof that they are the legitimate owner of the asset that they wish to transfer to someone else on the blockchain network. This asset is usually a token or virtual currency, such as Bitcoin, but it can also be any real-world asset represented on the blockchain by using tokens.

• Smart contract: These programs run on top of the blockchain and encapsulate the business logic to be executed when certain conditions are met. These programs are enforceable and automatically executable. The smart contract feature is not available on all blockchain platforms, but it is now becoming a very desirable feature due to the flexibility and power that it provides to the blockchain applications. Smart contracts have many use cases, including but not limited to identity management, capital markets, trade finance, record management, insurance, and e-governance. Smart contracts will be discussed in more detail in Chapter 9, Smart Contracts.

How blockchain works

We have now defined and described blockchain. Now let's see how a blockchain actually works. Nodes are either miners who create new blocks and mint cryptocurrency (coins) or block signers who validates and digitally sign the transactions. A critical decision that every blockchain network has to make is to figure out that which node will append the next block to the blockchain. This decision is made using a consensus mechanism. The consensus mechanism will be described later in this chapter.

Now we will look at the how a blockchain validates transactions and creates and adds blocks to grow the blockchain.

How blockchain accumulates blocks

Now we will look at a general scheme for creating blocks. This scheme is presented here to give you a general idea of how blocks are generated and what the relationship is between transactions and blocks:

1. A node starts a transaction by first creating and then digitally signing it with its private key. A transaction can represent various actions in a blockchain. Most commonly this is a data structure that represents transfer of value between users on the blockchain network. Transaction data structure usually consists of some logic of transfer of value, relevant rules, source and destination addresses, and other validation information. This will be covered in more detail in specific chapters on Bitcoin and Ethereum later in the book.
2. A transaction is propagated (flooded) by using a flooding protocol, called Gossip protocol, to peers that validate the transaction based on preset criteria. Usually, more than one node are required to verify the transaction.

3. Once the transaction is validated, it is included in a block, which is then propagated onto the network. At this point, the transaction is considered confirmed.
4. The newly-created block now becomes part of the ledger, and the next block links itself cryptographically back to this block. This link is a hash pointer. At this stage, the transaction gets its second confirmation and the block gets its first confirmation.
5. Transactions are then reconfirmed every time a new block is created. Usually, six confirmations in the Bitcoin network are required to consider the transaction final.

It is worth noting that steps 4 and 5 are considered non-compulsory, as the transaction itself is finalized in step 3; however, block confirmation and further transaction reconfirmations, if required, are then carried out in step 4 and step 5.

This completes the basic introduction to blockchain. In the next section, you will learn about the benefits and limitations of this technology.

Benefits and limitations of blockchain

Numerous advantages of blockchain technology have been discussed in many industries and proposed by thought leaders around the world who are participating in the blockchain space. The notable benefits of blockchain technology are as follows:

• Decentralization: This is a core concept and benefit of the blockchain. There is no need for a trusted third party or intermediary to validate transactions; instead, a consensus mechanism is used to agree on the validity of transactions.
• Transparency and trust: Because blockchains are shared and everyone can see what is on the blockchain, this allows the system to be transparent. As a result, trust is established. This is more relevant in scenarios such as the disbursement of funds or benefits where personal discretion in relation to selecting beneficiaries needs to be restricted.
• Immutability: Once the data has been written to the blockchain, it is extremely difficult to change it back. It is not genuinely immutable, but because changing data is so challenging and nearly impossible, this is seen as a benefit to maintaining an immutable ledger of transactions.
• High availability: As the system is based on thousands of nodes in a peer-to-peer network, and the data is replicated and updated on every node, the system becomes highly available. Even if some nodes leave the network or become inaccessible, the network as a whole continues to work, thus making it highly available. This redundancy results in high availability.
• Highly secure: All transactions on a blockchain are cryptographically secured and thus provide network integrity.
• Simplification of current paradigms: The current blockchain model in many industries, such as finance or health, is somewhat disorganized. In this model, multiple entities maintain their own databases and data sharing can become very difficult due to the disparate nature of the systems. However, as a blockchain can serve as a single shared ledger among many interested parties, this can result in simplifying the model by reducing the complexity of managing the separate systems maintained by each entity.
• Faster dealings: In the financial industry, especially in post-trade settlement functions, blockchain can play a vital role by enabling the quick settlement of trades. Blockchain does not require a lengthy process of verification, reconciliation, and clearance because a single version of agreed-upon data is already available on a shared ledger between financial organizations.
• Cost saving: As no trusted third party or clearing house is required in the blockchain model, this can massively eliminate overhead costs in the form of the fees which are paid to such parties.

As with any technology, some challenges need to be addressed in order to make a system more robust, useful, and accessible. Blockchain technology is no exception. In fact, much effort is being made in both academia and industry to overcome the challenges posed by blockchain technology. The most sensitive blockchain problems are as follows:

• Scalability
• Adaptability
• Regulation
• Relatively immature technology
• Privacy

All of these issues and possible solutions will be discussed in detail in Chapter 18, Scalability and Other Challenges.

Tiers of blockchain technology

In this section, various layers of blockchain technology are presented. It is thought that due to the rapid development and progress being made in blockchain technology, many applications will evolve. Some of these advancements have already been realized, while others are anticipated in the near future based on the current rate of advancement in blockchain technology.

The three levels discussed here were initially described in the book Blockchain: Blueprint for a New Economy by Melanie Swan, O'Reilly Media, 2015 as blockchain tiers categorized by applications in each category. This is how blockchain is evolving, and this versioning shows different tiers of evolution and usage of blockchain technology. In fact, all blockchain platforms, with limited exceptions, support these functionalities and applications. This versioning is just a logical segregation of various blockchain categories based on the way that they are currently being used, are evolving, or predicted to evolve.

Also note that this versioning is being presented here for completeness and for historic reasons, as these definitions are somewhat blurred now, and with the exception of Bitcoin (Blockchain 1.0), all newer blockchain platforms that support smart contract development can be programmed to provide the functionalities and applications mentioned in all blockchain tiers: 1.0, 2.0, 3.0, and beyond.

In addition to Tier 1, Tier 2 and Tier 3, or Tier X in the future, the following represents my own vision of what blockchain technology eventually could become as this technology advances:

• Blockchain 1.0: This tier was introduced with the invention of Bitcoin, and it is primarily used for cryptocurrencies. Also, as Bitcoin was the first implementation of cryptocurrencies, it makes sense to categorize this first generation of blockchain technology to include only cryptographic currencies. All alternative cryptocurrencies as well as Bitcoin fall into this category. It includes core applications such as payments and applications. This generation started in 2009 when Bitcoin was released and ended in early 2010.
• Blockchain 2.0: This second blockchain generation is used by financial services and smart contracts. This tier includes various financial assets, such as derivatives, options, swaps, and bonds. Applications that go beyond currency, finance, and markets are incorporated at this tier. Ethereum, Hyperledger, and other newer blockchain platforms are considered part of Blockchain 2.0. This generation started when ideas related to using blockchain for other purposes started to emerge in 2010.

• Blockchain 3.0: This third blockchain generation is used to implement applications beyond the financial services industry and is used in government, health, media, the arts, and justice. Again, as in Blockchain 2.0, Ethereum, Hyperledger, and newer blockchains with the ability to code smart contracts are considered part of this blockchain technology tier. This generation of blockchain emerged around 2012 when multiple applications of blockchain technology in different industries were researched.
• Blockchain X.0: This generation represents a vision of blockchain singularity where one day there will be a public blockchain service available that anyone can use just like the Google search engine. It will provide services for all realms of society. It will be a public and open distributed ledger with general-purpose rational agents (Machina economicus) running on a blockchain, making decisions, and interacting with other intelligent autonomous agents on behalf of people, and regulated by code instead of law or paper contracts. This does not mean that law and contracts will disappear, instead law and contracts will be implementable in code.

Machina Economicus is a concept which comes from the field of Artificial Intelligence (AI) and computational economics. It can be defined as a machine that makes logical and perfect decisions. There are various technical challenges that need to be addressed before this dream can be realized.

Discussion of Machina Economicus is beyond the scope of this book, interested readers can refer to https://www.infosys.com/insights/purposeful-ai/Documents/machina-economicus.pdf, for more information.

This concept in the context of blockchain and its convergence with AI will be elaborated on in Chapter 19, Current Landscape and What's Next.

Features of a blockchain

A blockchain performs various functions which are supported by various features. These functions include but are not limited to transfer of value, managing assets and agreements. All of the blockchain tiers described in the previous section perform these functions with the help of features offered by blockchain, but with some exceptions. For example, smart contracts are not supported by all blockchain platforms, such as Bitcoin. Another example is that not all blockchain platforms produce cryptocurrency or tokens, such as Hyperledger Fabric, and MultiChain.

The features of a blockchain are described here:

• Distributed consensus: Distributed consensus is the primary underpinning of a blockchain. This mechanism allows a blockchain to present a single version of the truth, which is agreed upon by all parties without the requirement of a central authority.
• Transaction verification: Any transactions posted from the nodes on the blockchain are verified based on a predetermined set of rules. Only valid transactions are selected for inclusion in a block.
• Platform for smart contracts: A blockchain is a platform on which programs can run to execute business logic on behalf of the users. Not all blockchains have a mechanism to execute smart contracts; however, this is a very desirable feature, and it is available on newer blockchain platforms such as Ethereum and MultiChain.

Smart Contracts
Blockchain technology provides a platform for running smart contracts. These are automated, autonomous programs that reside on the blockchain network and encapsulate the business logic and code needed to execute a required function when certain conditions are met. For example, think about an insurance contract where a claim is paid to the traveler if the flight is canceled. In the real world, this process normally takes a significant amount of time to make the claim, verify it, and pay the insurance amount to the claimant (traveler). What if this whole process were automated with cryptographically-enforced trust, transparency, and execution so that as soon as the smart contract received a feed that the flight in question has been canceled, it automatically triggers the insurance payment to the claimant? If the flight is on time, the smart contract pays itself.
This is indeed a revolutionary feature of blockchain, as it provides flexibility, speed, security, and automation for real-world scenarios that can lead to a completely trustworthy system with significant cost reductions. Smart contracts can be programmed to perform any actions that blockchain users need and according to their specific business requirements.

• Transferring value between peers: Blockchain enables the transfer of value between its users via tokens. Tokens can be thought of as a carrier of value.
• Generation of cryptocurrency: This feature is optional depending on the type of blockchain in use. A blockchain can create cryptocurrency as an incentive to its miners who validate the transactions and spend resources to secure the blockchain. We will discuss cryptocurrencies in great detail in Chapter 5, Introducing Bitcoin.
• Smart property: It is now possible to link a digital or physical asset to the blockchain in such a secure and precise manner that it cannot be claimed by anyone else. You are in full control of your asset, and it cannot be double-spent or double-owned. Compare this with a digital music file, for example, which can be copied many times without any controls. While it is true that many Digital Rights Management (DRM) schemes are being used currently along with copyright laws, but none of them is enforceable in such a way as blockchain based DRM can be. Blockchain can provide DRM functionality in such a way that it can be enforced fully. There are famously broken DRM schemes which looked great in theory but were hacked due to one limitation or another. One example is Oculus hack (http://www.wired.co.uk/article/oculus-rift-drm-hacked).

Another example is PS3 hack, also copyrighted digital music, films and e-books are routinely shared on the internet without any limitations. We have copyright protection in place for many years, but digital piracy refutes all attempts to fully enforce the law on a blockchain, however, if you own an asset, no one else can claim it unless you decide to transfer it. This feature has far-reaching implications, especially in DRM and electronic cash systems where double-spend detection is a crucial requirement. The double-spend problem was first solved without the requirement of a trusted third party in Bitcoin.

• Provider of security: The blockchain is based on proven cryptographic technology that ensures the integrity and availability of data. Generally, confidentiality is not provided due to the requirements of transparency. This limitation is the leading barrier to its adoption by financial institutions and other industries that require privacy and confidentiality of transactions. As such, the privacy and confidentiality of transactions on the blockchain is being researched very actively, and advancements are already being made. It could be argued that, in many situations, confidentiality is not needed and transparency is preferred. For example, with Bitcoin, confidentiality is not an absolute requirement; however, it is desirable in some scenarios. A more recent example is Zcash, which provides a platform for conducting anonymous transactions. This scheme will be discussed in detail in Chapter 8, Alternative Coins. Other security services, such as non-repudiation and authentication, are also provided by blockchain, as all actions are secured using private keys and digital signatures.
• Immutability: This is another critical feature of blockchain: once records are added to the blockchain, they are immutable. There is the remote possibility of rolling back changes, but this is to be avoided at all costs as doing so would consume an exorbitant amount of computing resources. For example, with Bitcoin if a malicious user wants to alter previous blocks, then it would require computing the PoW once again for all those blocks that have already been added to the blockchain. This difficulty makes the records on a blockchain essentially immutable.
• Uniqueness: This blockchain feature ensures that every transaction is unique and has not already been spent (double-spend problem). This feature is especially relevant with cryptocurrencies, where detection and avoidance of double spending are a vital requirement.