THELOGICALINDIAN - Introduction
As you’re apparently already aware, the ability of Bitcoin boils bottomward to cryptography. Using a arrangement of accessible and clandestine keys, you can clue every users’ affairs after absolute his or her identity. Security and privacy: the best of both worlds.
What you ability be beneath accustomed with is alleged hashing, the specific algebraic address employed. It takes abstracts of any admeasurement and converts it to a after amount of anchored length–the hash. The accessible keys listed on the Bitcoin blockchain are hashed from clandestine keys, as are the signatures bare to verify affairs in the network.
Bitcoin uses the SHA-256 algorithm, which has the appropriate acreage that it is about absurd invert. This agency that cipher can acquisition a clandestine key which could aftermath your signature or accessible key, nor account your clandestine key in reverse. If anyone could, he would use it to accelerate all of your bitcoins to himself.
Planting the Seed
The Bitcoin blockchain additionally uses hashing in its centralized structure. It contains a almanac of every transaction; your wallet absolutely calculates your antithesis application accession and subtraction. The affairs in anniversary block are organized into a anatomy alleged a Merkle tree, which is shaped like a bracket clash (as in the featured graphic).
The timberline is upside-down: the affairs at the basal are referred to as leaves, and their abstracts ethics are concatenated and hashed calm two at a time. If there are an odd cardinal of them, the aftermost one is duplicated, and eventually they all adhere into a distinct assortment alleged the Merkle root. These roots articulation the blockchain together, with anniversary new block absolute the top assortment of the last.
The best important action of the Merkle basis is verification; it can be calmly accurate whether or not any transaction abstracts was acclimated to anatomy it, acceptation you can accredit any transaction application aloof the best contempo block. Its block attack contains the aspect of every Bitcoin transaction anytime issued, which annex out from its basis assortment value.
Bitcoin 2.0
But what if we’re sending added than aloof bitcoins? In accession to the payer, payee, and bitcoin amount, anniversary transaction additionally contains a area alleged OP_RETURN. Most bodies still leave it blank, but it can authority abounding added types of data.
Using protocols like Counterparty, we can accommodate abstracts alleged smart property, which corresponds to absolute digitally-controlled items (such as acute cars) or represent abstruse assets like stocks. Now that they’ve adopted Ethereum’s Turing-complete language, we should additionally be able to apparatus assertive smart contracts, such as allotment rules for acute stockholders.
Many of these acute affairs can be automatically implemented and enforced. Once they are included in the Bitcoin blockchain, the top assortment can thereafter ascertain any forgeries. No adjudicator is all-important to say if a arrangement is valid–instead of signing afore a court, you assurance to the blockchain, instead.
Transactions are bound in admeasurement to anticipate aggressive blockchain growth, with the OP_RETURN area actuality 40 bytes as of the time of this writing. This prevents us from autumn documents, media, or added ample files, but we can abundance the hashes of them with ease. By comparing, we could after validate any archetype declared to be unaltered.
Factomize Everything
Unfortunately, Bitcoin’s 10-minute block time is too apathetic for best decentralized applications, which charge conduct their operations in absolute time. Moreover, if anybody started application them, our accumulated affairs would flood the arrangement and cede the blockchain too ample for best nodes to handle.
Thankfully, Factom has a solution. Using a added peer-to-peer arrangement layered bestride of Bitcoin, it arranges abstracts submitted by these applications into Merkle copse in absolute time. Once per block, the roots are calculated, accumulated again, and amid into the Bitcoin blockchain via a distinct transaction.
User-submitted abstracts is thereby chip into the beyond Merkle structure, or Factomized, if you will. The Merkle roots on the Entry Layer become Merkle leaves on the Directory Layer, which basis in a Bitcoin transaction that stems from a block attack that hashes all the way up to the top.
Anything can be Factomized in this fashion, including other blockchains custom tailored to specific applications. Every acute article on Ethereum, every book area on Storj, every agenda article on the Internet of Things will be distilled to one number, with which any bogus of annihilation anytime recorded could be detected.
Regardless of whether bodies use bitcoins as a currency, bodies will abide to charge Bitcoin; it has the best defended blockchain available, with the best alive abounding nodes and the accomplished mining difficulty. If a new blockchain supplants it, aggregate will be Factomized again, and the top basis charcoal the best difficult in the cosmos to reverse-calculate. It is the greatest adjudicator of truth–the ultimate assortment value.
