Some technology startup companies are raising money in a new way, by issuing digital tokens in return for funds. This is often colloquially called “doing an ICO”, and this article aims to explain how this works.
A blockchain is a type of distributed ledger. But new distributed ledgers are emerging. These are databases where control over the data’s evolution is shared between entities. Here’s a handy cheatsheet.
This post tries to describe two very different uses for blockchain technology: Digital Token Ledgers that record ownership changes of digital tokens, and Activity Registers that record timestamped proofs of existence of data or agreements about data. Bitcoin is used for both.
I have heard this comment many times:
“Blockchain” is a solution looking for a problem.
That is incorrect – here’s the problem statement, originally articulated in 2008:
The problem statement, to paraphrase, is
“How do people pay each other electronically without being at the behest of Financial Institutions?”
The proposed solution is:
“Bitcoin”
This article attempts to explain the difference between the revolutionary disruptive innovation of bitcoin and the evolutionary efficiency innovations of industry workflow tools, and why calling them both “blockchains”, even as a generic term, is incredibly confusing.
For the rest of this post, I will use the phrase “industry workflow tools” instead of industry blockchains, as some of the emerging solutions being proposed in this space are not blockchains (eg, R3’s Corda is not a blockchain but Digital Asset’s solutions are – however, both companies are proposing industry workflow tools).
I have been looking for a one pager explaining the difference between users, miners, nodes and other participants on the bitcoin network. I couldn’t find one so I attempted to draw my own. Here it is.
Click on the image for a high-resolution copy you can download, share, copy and print.
Feedback very welcome!
Bitcoin’s network
I enjoyed listening to episode 107 of the podcast “Epicenter Bitcoin” where Gideon Greenspan, CEO and Founder of Coin Sciences was interviewed about MultiChain. Gideon also writes a great blog. Here are my notes on parts of the podcast that I found particularly interesting. Misunderstandings and paraphrasing errors are mine.
Note: The term ‘miner’ is used frequently in the podcast but I try to refer to them here as block-makers or block-adders.
This gets fairly technical; if this is hard to follow, it may be helpful to read my introductions to blockchains, bitcoin, digital tokens, and smart contracts first.
