Keith Tan, CFA

A distributed ledger that records transactions sequentially into blocks and links these blocks in a chain. Each block has a cryptographically secured “hash” that links it to the previous block. In order to add a new block to the chain, the consensus mechanism requires miners to solve a cryptographic problem.  The solution has to be verified by all the other participants in the network. If the majority of the nodes verify that the solution is correct, the new block is added to the blockchain and all copies of the distributed ledger are updated.  

Mining requires vast resources of computing power and electricity, so this imposes substantial costs on any attempt to manipulate a blockchain’s historical record.  In order for a hacker to make a fraudulent transaction on the Blockchain, he would need to gain control of a majority of the nodes to gain consensus.

Distributed ledgers or Blockchains can take the form of permissioned networks or permissionless networks

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