So What Does All This Have to Do With Blockchain?
Blockchain, at its simplest, is a ledger. What makes blockchain so different is
that it’s a fully distributed ledger, with no central governing authority respon-
sible for it. That means every participant in the blockchain network has a full
copy of the ledger. These participants then collectively validate upd ates to the
chain.
Entries in the blockchain ledger are permanent and visible, with encryption
technology and protocols effectively replacing third-party intermediaries.
This is called a “trustless trust,” since no trust is required between transaction
participants. And because transaction histories can be seen but not modified,
this shared, visible, immutable ledger enables us to “trust but verify.”
To better understand how this all works, let’s go back to Mr. Scrooge for a
moment. In the description above, he executes transactions with individuals
and has them sign the little black book to confirm those transactions. He knows
his debtors, so he trusts the validity of their signatures.
The diagram below illustrates the elements of a similar transaction in a block-
chain system:
Message
Message
Signature
My Private Key
Valid Signature
Signature
Src Public Key
My Public Key
Dst Public Key
Figure 1: Transaction in a Blockchain System
Trusting a “Trustless Trust” Transaction
Remember, Scrooge validated the signature because he knew the individual. In
the world of blockchain and encryption, “my public key” and “my private key”
help create a valid signature without requiring that level of familiarity. My pub-
lic key is my identity in the blockchain, which (in this case) could almost be
considered my address. But my private key is known only to me. Let’s say I want
to create a transaction in the blockchain and send something to Mr. Scrooge.
I’d do the following:
1. Take the message I’m sending and create a unique signature using
encryption technology and my private key.
2. Combine the message and the unique signature, then add my public key
as well as Scrooge’s (to whom I’m sending the message).
WINTER 2018 | THE DOPPLER | 19