Frequently asked questions
Below you'll find answers to the questions we get asked the most about blockchain and related topics.
What is a blockchain?
How does a blockchain work?
Transactions on a decentralized network (1 transaction = person A sends some data to person B) are encrypted, put together and produced in a block. So you can image blocks of digital data. These data blocks are chained together and form a chain, a blockchain.
As the blocks are chained together via hashing a blockchain is very secure. If somebody wants to change a transaction which has already been put into a block on a blockchain, all the blocks after the producing block has to be modified.
What are the benefits of a blockchain?
- Greater transparency and increased trust
- Enhanced security
- Improved traceability
- Increased efficiency
- Reduced costs
What is a block in a blockchain?
What is a blockchain wallet?
A blockchain wallet is a digital wallet which enables the access to digital assets stored on a blockchain. Basically a blockchain wallet stores a private key which is needed to access a public address which the digital assets belong to.
Each blockchain has its own wallet. But there are also wallets where it is possible to store assets from different blockchains.
What is a blockchain company?
A blockchain company like block42 Blockchain Company GmbH is a software company which is entirely focused on this emerging technology, named blockchain.
What is a private blockchain?
A private blockchain is managed and controlled by a smaller set of actors, e.g. a consortium. In a private blockchain only permitted participants can join the network.
That is the case for e.g. business blockchains. These are blockchains operated by multiple organizations. Generally it does not make sense to operate a blockchain within one organization. The most known private blockchain framework is Hyperledger.
What is a public blockchain?
A public blockchain is a chain where everybody can be part of. The best known public blockchain is Bitcoin. On the second place comes the Ethereum Blockchain.
What is the Ethereum blockchain?
The Ethereum blockchain has introduced Smart Contracts. The use case of Ethereum is not a Store of Value, but a platform for distributed applications.
What is Bitcoin?
Bitcoin is the best known public blockchain and was invented in 2008 by an unknown person or group called Satoshi Nakamoto. The use case of Bitcoin is a store of value and medium of exchange.
What is a Smart Contract?
A smart contract is a programmable contract which runs on a blockchain like Ethereum, Cardano, Neo, Icon or Komodo. Smart Contracts where first coined by a computer scientist and American cryptographer called Nick Szabo in 1994.
Who controls a blockchain?
A blockchain and its stored data is controlled by all participants in the network. Hence the more people joining a decentralized network the safer and more distributed a network becomes.
Is Bitcoin and Blockchain the same?
No, they are different. Blockchain is the underlying technology which enables many different use cases. Bitcoin is the best known blockchain and its use case is currently limited to a crypto currency (a store of value and medium of exchange).
Due to its advantages, a Blockchain enables the improvement of existing use cases and the introduction of innovative and new business models.
What can I do with a Smart Contract?
A Smart Contract enables a transparent and conflict-free way of creating, storing and exchange of digital assets without a middle man or centralized party.
These assets could be money, real estate, art, shares or anything of value.
What is the best Blockchain?
It is sheer impossible to name the best blockchain. It depends on the use case and on the capabilities needed for a specific purpose.
What is Hyperledger?
Hyperledger is an open source blockchain which was mainly created by the Linux Foundation. It is mainly used for industrial blockchain applications. Hyperledger is mainly used as a private blockchain and for different business use cases like supply chain, product history, financials and IoT.
Why should an organization/company/firm use a Blockchain?
A blockchain can be used for many different use cases, but it is important to understand, that a blockchain is not the solution to every problem.
Blockchains can improve the level of trust between many parties, can increase the level of transparency or also can improve processes and reduce costs. A blockchain has many advantages, but also disadvantages over other technical solutions.