Page 26 - MSDN Magazine, March 2018

BLOCKCHAIN
Blockchain
Fundamentals
Jonathan Waldman
Back in 1999, the file-sharing network Napster made it easy to share audio files (usually containing music) on a hybrid peer-to- peer network (“hybrid” because it used a central directory server). That file-sharing network did more than just share music files: It allowed all users to retain copies of those shared files such that a single digital asset resulted in a limitless number of perfect copies across a global network. The casual ease with which technology was leveraged by anyone with a computer caught venerable Tower Records by such surprise that it was forced to close all of its 89 U.S.-based stores by 2006.
In 2008, the subprime debacle occurred, during which long- established, powerful U.S. financial institutions and insurance companies declared or teetered on the brink of bankruptcy. Those
circumstances called for immediate federal government inter- vention in order to avoid a domestic and possibly global financial meltdown. This important event left a populace leery of centralized banks and exposed the danger of having financial ledgers closed to public scrutiny. In March 2008, the Heartland Payment Systems data breach exposed more than 130 million credit card numbers, many of which were later used to make fraudulent purchases.
These events illustrate the perils of living in a digital, connected world that depends on transaction-fee-generating middlemen and leaves people vulnerable to digital exploits, greed and crime. The academic challenge became how to create an available, disin- termediated digital infrastructure on which a digital asset can be openly and reliably transferred (rather than copied and shared) from owner to owner, that has no corruptible or fallible central authority, is secure, and can be trusted.
Enter the Bitcoin Blockchain
Seemingly in response to the historical context in which it happened, on Jan. 3, 2009, a new kind of infrastructure mined 50 digital coins and recorded them on a tamper-proof public ledger that’s replicated on a decentralized peer-to-peer network of Internet-connected computers. Those 50 cryptocurrency units, called bitcoins, were recorded as the genesis block—the first link on what would come to be known as the Bitcoin blockchain.
The remarkable thing about this blockchain-powered crypto- currency is that it lacks any sort of trust authority or governance
This article discusses:
• Driving forces that led to the creation of blockchains
• How blockchains track and enforce ownership of digital assets
• Core underpinnings of blockchain technologies
• Leveraging core components to build a blockchain
• How blockchains use consensus to achieve decentralized automation
Technologies discussed:
Blockchain, Cryptographic Hash, Public Key Cryptography (PKC), Merkle Tree, Consensus Algorithm
20 msdn magazine