Blockchains are secure by design and include sophisticated distributed computing systems with high Byzantine Fault Tolerance. Blockchain technology was invented by Satoshi Nakamoto in 2008 to serve as a public transaction ledger of the cryptocurrency called Bitcoin. The invention of the blockchain for Bitcoin made it the first digital currency to solve the double-spending problem without any need for a centralised server or third party trusted authority.
Till date, Bitcoin is still the most commonly used application using blockchain technology. Bitcoin is a decentralised digital currency payment system that consists of a public transaction ledger called a blockchain.
There are many different kinds of blockchains.
- Public blockchain: Public blockchains are like Bitcoins, which are large distributed networks that are run through a native token. They are open for the public to participate at any level and have open source code that the community maintains.
- Permissioned blockchains: Permissioned blockchains like Ripple control roles that individuals can play within the network. They are still large and distributed systems that use a native token. Their code may or may not be open source.
- Private blockchains: Private blockchains tend to be smaller and don’t use a token. Their membership is closely controlled. These types of blockchains are favoured by consortiums that have trusted members and trade in confidential information.
All the above blockchains use cryptography to allow every participant on any given network to manage the ledger in a secure way, without the need for any central authority to enforce the rules.