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Crypto-currencies, block chain and distributed ledgers.

BIScom Subsection: 
Author: 
Nigel Morris-Cotterill

This ultra-simplified explanation clarifies the absolute basics of a subject that has become shrouded in myth and mystery.

The lockchain, crypto-currencies (or cryptocurrencies) like bitcoin, distributed ledgers and smart contracts are, actually, stuff you already know..

The blockchain is, simply, a method of recording data and making it difficult to modify; it's as close to a permanent record as we're likely to find since the Dead Sea Scrolls. It's not infallible but it's pretty damned close. Technologically, it's horribly complicated but it's simple to explain: data is held in "blocks" which are connected by the complicated bit - cryptography - to form a "chain."

On its own, it doesn't do much, it's a bit like an empty database. The truly clever thing is that the database is replicated across many, many machines. Anyone can have it including, incidentally, law enforcement and banks but the focus is usually on "exchanges." In this context, "exchanges" are any point where authorised changes can be made, not limited to currency exchanges. When changes are made to data, the data is updated in every copy of the database.

Propagation

If you know anything about the internet, you'll know about "propagation." All internet domain names (like bankinginsurancesecurities.com) have a home server. Like your home, that server has an address. That address is known as a DNS which stands for Domain Name Server. See: take out the jargon and it's all pretty simple.

There is a super-system that records where all domains live. Websites live on servers, they do not live on domains. The domain is merely the publicly available address for that website. So, if a website is moved from one server to another, the super-system won't know and it will continue to send visitors to the old location, even if there is nothing there.

There are two ways to deal with this: a notice can be placed on the old server "forwarding" traffic to the new server but this is a very flaky and inconvenient way of doing it and requires the use of a pseudonym for the new server anyway. It's far better to update the DNS for the domain so that the domain and the website are hosted together.

When a DNS is updated, information goes to the super-system which then tells a network of almost-as-super-systems to update their records and send traffic to the new server. That system is called "propagation" and it can take as much as 72 hours for all servers to be updated.

Returning to the blockchain, updating the records on all the blocks around the world is a similar process. And, like domain name information, it is not instant.

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