What is Blockchain?


Proof of existence

The Blockchain can be applied to virtually everything as it has a wide range of utilities and additional uses. In fact, the disruptive potential of this technology is so great that it is bound to change the way how we keep record of things and much more.

One of these uses is to firmly record any document into the known public distributed ledger – The Blockchain. Proof of existence (PoE) has been here for a some time and has become a pretty handy tool when it comes to public proof and authenticity of any document or record as even in the 21 century an email or a signed message sometimes might not be enough to prove something.

Proof of Existence is just taking the hash of something and storing that hash in the Blockchain. Since the Blockchain stores all of the transactions confirmed and all hashes are unique, once that transaction is confirmed, it can be referenced again to prove that a specific document exists.

(Hashing is the transformation of a string of characters into a usually shorter fixed-length value or key that represents the original string. Hashing is used to index and retrieve items in a database because it is faster to find the item using the shorter hashed key than to find it using the original value.)

Timestamping

Timestamping is the process of securely keeping track of the creation and modification time of a document. Security here means that no one – not even the owner of the document – can be able to change it once it has been recorded.Contracts can be timestamped, along with digital signatures of both parties to prove when they were signed.

Simply by a process of Blockchain registering and timestamping, PoE enables anyone/everyone to securely and anonymously store online distributed existence for any document. Documents are not stored in a centralized database or in the Bitcoin Blockchain, so all data stays private. All that is stored is a cryptographic digest of the file, linked to the time in which the document was submitted. This is an online service which allows people to publicly proving that certain information belongs to someone without revealing the owner or data, with a decentralized certification based on the Bitcoin network.

Common uses for Proof of Existence

A person can prove a certain data exists at a certain moment of time.
People can publicly reveal the digest and if conflict arises they can prove they had the data that generated the digest. Proof of Existence is useful for patents, copyrighted material, etc. As we use the Bitcoin Blockchain to store the document proof, anyone can certify the existence of a document without the need of a central authority. The computing power of the whole bitcoin network is used to certify your data.

 

Some of the common uses for PoE are:

  • Document time stamping.
  • Proving ownership and Deed transfer
  • Demonstrating data ownership without revealing actual data.
  • Asset realization
  • Checking for document integrity

If a person stores a proof for his document and later decided to re-upload it, the Blockchain system will only recognize it if it is 100% completely the same document. The slightest change and the system will recognizes it is different. This gives the user the needed security that certified data can’t be changed.

Technical foundations

It’s essentially a notary public service avaiable on the Internet, an inexpensive way of using Bitcoin’s distributed computing power to enable people to verify that a document existed at a certain point in time.

Algorithms can be used to create a digest, or a cryptographic string that represents of a piece of data. The digest created by a hash function is based on the characteristics of a document. No two digests are ever the same, unless the data used to compute the digests is the same.

The document is certified via embedding its SHA256 digest in the Bitcoin Blockchain. This is done by generating a special Bitcoin transaction that contains/encodes the hash via an OP_RETURN script. This is a Bitcoin scripting opcode that marks the transaction output and allows a small amount of data to be inserted, which in our case is the document’s hash, plus a marker to identify all of our transactions.

It is possible to hash the data you wish to, timestamp and turn it into a Bitcoin address. By making a small payment (A Satoshi – the smallest fraction of a Bitcoin that can currently be sent: 0.00000001 BTC) to it, the payment is stored along with the address you paid to on the Blockchain.

Since only the hash is stored on the Bitcoin Blockchain, no one/body can tell what data you stored keeping your document privately held, but given the pre-hashed data you can prove the data was created prior to the block that contains the payment made to that address.

Once the transaction is confirmed, the document is permanently certified and proven to exist. If the document hadn’t existed at the time the transaction entered the Blockchain, it would have been impossible to embed its digest or cryptographic string in the transaction. This is due to the hash function’s property of being second pre-image resistant. Embedding some hash and then adapting a future document to match the hash is also impossible. This is why once the Bitcoin Blockchain confirms the transaction generated for the document its existence is proven, permanently, with no trust required. The existence of a transaction in the Blockchain proves that the document existed at the time the transaction got included into a block.

 

Advantages of using the Bitcoin network

The main advantages are anonymity, privacy, and getting a decentralized proof which can not be modified or erased by anyone not even third parties,  governments or the owner himself. Your document’s existence is permanently validated by the Blockchain even if this site is compromised or down, so you don’t depend or need to trust any central authority. All previous data times tamping solutions lack this freedom.

It’s anonymous. No one knows who you are, what data you’re timestamping, or even the fact that you’re timestamping anything.

It’s extremely cheap. At the current rates, including the transaction fees, it costs around 5 cents. You can make a transaction without fees, lowering the cost to $0.00000116, a fraction of a cent. However, it is highly recommended to pay the fees to support the miners who verify your timestamp with their computing resources.

Before sharing ideas with third parties, entrepreneurs can timestamp the information that is about to be shared with them, as well as the fact that the information is being shared, to help resolve possible disputes.

There is an immense potential for further applications for the Blockchain, and right now many of these future applications are being developed to be implemented in the near future.