Nov 2015

The Blockchain - A Short Briefing Note

1. The Blockchain is a register or database containing statements (e.g. ownership, rights or a smart contract) provided by the participants to provide a complete history. The history cannot be modified or deleted you can only add new statements

  • The Bitcoin Blockchain contains statements of change of ownership - the first statement of a bitcoin ownership is the coinbase transaction inherent in each new Block (currently 25 new bitcoins per Block awarded to the validator)
bitcoin briefing

2. There are rules defined for a particular Blockchain that determine what statements and in what form can be added to a Block

  • The Bitcoin rules require the current ownership to be checked and the correctness of the digital signature (elliptic curve cryptography) provided by the owner to transfer ownership

3. The Block validator for each new statement checks the rules have been obeyed

  • In Bitcoin the validator is the community of miners, themselves constructed as pools or farms to get maximum processing capability

4. The Validator validates the Block and links it to the chain using hash functions in exchange for a reward

  • The Bitcoin reward to the validator or miner is currently 25 bitcoins per block validated but this will halve every 210,000 blocks (about 4 years) until 21m (arbitrary limit) bitcoins have been issued in about 2140. A bitcoin is currently worth $277

5. The Blockchain may be public (accessible to all) or private (accessible to the membership)

  • The Bitcoin Blockchain is public

6. The Blockchain may be centralised (validated by an entity) or decentralised (validated by a community)

  • The Bitcoin Blockchain is decentralised

7. A validation community has to reach consensus to validate a Block, an entity has intrinsic consensus

  • The Bitcoin consensus is reached by miners calculating a hash function (SHA256 applied twice) of the new block including a link to the existing blockchain with certain properties, it currently takes on average 10 minutes, and this Proof Of Work (POW) is manipulated every 2016 blocks (about 2 weeks) to always take about 10 minutes on average. The cost of mining (currently about $300m per year) is barely covered by the reward of bitcoins (currently about 1.3m X current value = $360m per year). Transaction fees are currently optional.

  • Management of the Bitcoin Blockchain by the validators doesn't require secret cryptographic keys which is not only necessary because of the problems of trusting an open community but it is also a very smart part of the security design.

8. The Blockchain may be permissioned (users have identity) or permissionless (users are anonymous or pseudo-anonymous)

  • Bitcoin is permissionless, the participants are pseudo-anonymous - they are associated with one or more digital addresses representing the bitcoin ownership which could allow some forms of tracking depending on how they are used.

Dr David Everett, SCN Technical Researcher.


12/02/2016 Headlines

Visa Puts Consumers in Charge of Security

Visa Inc. is introducing a new service to help Visa issuers empower consumers to monitor and control how, where, and when their Visa credit, debit, and prepaid .....Read More

Exterion Media and Telefonica UK introduce Abi - The Smart Insights Tool

Exterion Media has introduced Abi, a new insights tool for marketers that draws on anonymous aggregated data from Telefonica UK's 25 million O2 customers, to ge.....Read More

OMAPI Specification Updated to Reflect Growth in Dual SIM Devices and Enhance Communication between Mobile Apps and SEs

The SIMalliance has published an updated version of its OMAPI Specification. OMAPI v3.2 incorporates changes to accommodate the growing number of dual SIM devic.....Read More

INSIDE Provides 'Off-the-Shelf' Solutions for Banks wanting to Offer HCE Cloud-Based Payments

INSIDE Secure has announced that HCE Service Ltd, UK and HCE Secure IT Services (Pvt) Ltd, India will leverage INSIDE Secure's technology in conjunction with th.....Read More

MTN Nigeria Selects Gemalto for First Commercial Rollout of GSMA Mobile Connect Authentication Service

Gemalto has been selected to provide its LinqUs Mobile ID platform. to MTN Nigeria. This new project, operated for MTN in SaaS mode by Gemalto Allynis Services,.....Read More

Paysafe Provides Suite of Payment Services for Payfriendz P2P App

Paysafe Group has been selected by Payfriendz to enable the launch of its innovative P2P social payments app and virtual MasterCard solution.

Payfriend.....Read More

Video Interviews

Tim Jones talks on the wealth of networks

Christophe Dolique of Gemplus talks about ·SIM

Dominique Brule of Philips Semiconductors talks about Near Field Communication