What is blockchain?
Blockchain, sometimes referred to as “Distributed Ledger Technology”, makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.
A simple analogy for understanding blockchain technology is a Google Document. When we create a document and share it with a group of people, the document is distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the document at the same time. No one is locked out waiting for changes from another party, while all the modifications applied to the document are being recorded and synchronized in real-time. It ensures that the process of making changes is completely transparent.
Of course blockchain is more complicated than a google doc, but the analogy is valid because it illustrates the three main concepts of the technology.
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Bitcoin
Bitcoin (₿) is a cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto and started in 2009 when its implementation was released as open-source software. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Research produced by University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Bitcoin has been praised and criticized. Critics noted its use in illegal transactions, its high electricity consumption, price volatility, and thefts from exchanges. Some economists, including several Nobel laureates, have characterized it as a speculative bubble. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
Criptography
Cryptography, or cryptology (from Ancient Greek: , romanized: kryptós “hidden, secret”; and graphein, “to write”, or -logia, “study”, respectively), is the practice and study of techniques for secure communication in the presence of third parties called adversaries.
More generally, cryptography is about constructing and analyzing protocols that prevent third parties or the public from reading private messages.
Modern cryptography exists at the intersection of mathematics, computer science, electrical engineering, communication science, and physics.
Applications of cryptography include electronic commerce, chip-based payment cards, digital currencies, computer passwords, and military communications. Cryptography prior to the modern age was effectively synonymous with encryption, the conversion of information from a readable state to apparent nonsense. The originator of an encrypted message shares the decoding technique only with intended recipients to preclude access from adversaries.
The cryptography literature often uses the names Alice (“A”) for the sender, Bob (“B”) for the intended recipient, and Eve (“eavesdropper”) for the adversary. Since the development of rotor cipher machines in World War I and the advent of computers in World War II, the methods used to carry out cryptology have become increasingly complex and its application more widespread.
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Crypto wallet
An actual bitcoin transaction from a web based cryptocurrency exchange to a hardware cryptocurrency wallet. A cryptocurrency wallet, comparable to a bank account, contains a pair of public and private cryptographic keys. The keys can be used to track ownership, receive or spend cryptocurrencies. A public key allows for other wallets to make payments to the wallet's address, whereas a private key enables the spending of cryptocurrency from that address.The cryptocurrency itself is not in the wallet. In the case of bitcoin and cryptocurrencies derived from it, the cryptocurrency is decentrally stored and maintained in a publicly available distributed ledger called the blockchain.
eID wallet
Providing an eID and a diploma and digitally signing the 'application form' with a crypto wallet app. Some wallets are specifically designed to be compatible with a framework. The European Union is creating an eIDAS compatible European Self-Sovereign Identity Framework (ESSIF) which runs on the European Blockchain Services Infrastructure (EBSI). The EBSI wallet is designed to (securely) provide information, an eID and to sign 'transactions'.