Here are 8 key capabilities that have helped create this innovative platform that has the potential to modernize the post-marketing ecosystem:
1. The asset is incorporated: the asset called Bitcoin is produced and managed entirely within the Bitcoin network. Therefore, the history and quantity of each Bitcoin movement is mathematically verifiable by the history recorded in the distributed ledger of the Bitcoin network.
2. Party identity abstraction: security by darkness is integrated into the platform, which means that the individual parts are never identified. Instead, security keys (public and private key pairs) are required to gain access to the output of the transaction. Only the owner of the private key can send Bitcoins or get access to received bitcoins. Only owners of private keys know their total aggregate amount of Bitcoins.
3. Transaction linking : each transaction record (general ledger entry) is linked to previous transactions and is standardized for each participating node. Each entry in the general ledger can be retraced in its entire history and can be reconstructed.
4. Transaction scripts: these are the standardized rules and conditions applied to a transaction. Each node applies the same rules. In the simple Bitcoin model, a Bitcoin moves from one part to another according to the rules. The latest blockchain versions have expanded the scope and capabilities of these rules, which form the basis of what is called “smart contracts”.
5. Distribution of transactions: there is a standard network protocol that allows each participating node to receive each transaction and apply the same validation rules.
6. Blockchain: this is the only standard for the way in which each node stores the transaction data (general ledger data). Each node adheres to that standard and can have a complete copy of the data. This is sometimes called a “distributed ledger”. The records, or transaction blocks, are added to the block chain and include a link to the previously added block. This is the official point of the immutable recording of a transaction.
7. Decentralized Consensus: Consists of the standards and rules of how each node exchanges the blockchain information, the mathematical rules for all the nodes to agree the integrity of that data (sometimes called “proof of work”) and the incentive of payment to support the consensus model. A key point of the model and this whole platform is a method to ensure that all transactions are validated and all valid transactions are added once. Valid transactions (sometimes called censorship) can not be omitted and, in the case of the Bitcoin network, a Bitcoin can not be spent twice as much.
8. Confidence vs. Without Trust or Permission vs. Not Allowed: The “No Confidence” model refers to the public and open Internet access in which the Bitcoin network was built. Anyone can download the open source software and join. The Bitcoin network was built to distrust any node based on a model that works as long as the majority (> 51%) of the nodes act as honest participants in the consensus activity described above. Reliable or authorized implementations are important modifications to that model, which requires authorized servers to be approved and addressed in order to participate.
In summary, the blockchain is a network and a database. It has built-in rules and security and maintains internal integrity and its own history. These components create the value of the Bitcoin block chain, but each of these concepts has the potential to be applied individually or in various combinations to improve the existing processing of financial transactions.