What is Blockchain?

Blockchain has been one of the most oft-used buzzwords in the tech sphere for the last couple of years. However, as much as you might have heard it being thrown around as the next big disruptive technology, actually getting a good grasp on what it is might have served more difficult.

To put it in as simple terms as possible, blockchain is a digital ledger that records transactions, of almost any kind, in a way that is fundamentally immutable. This page is not intended as an exhaustive resource explaining all of the intricate ins-and-outs of blockchain. Instead, with this page, we hope to simply give a solid introduction to the topic that will prime users for further reading if they so wish.

Bitcoin and the Origins of Blockchain

Bitcoin is a peer-to-peer electronic cash system that uses blockchain technology to create a decentralized borderless currency. To say that Bitcoin simply uses blockchain is somewhat of an understatement. The whitepaper for Bitcoin, published in 2008 by Satoshi Nakamoto, announced blockchain technology to the world.

While Bitcoin is focused on establishing a new type of digital currency for the information age, the underlying technology of Bitcoin was the real big breakthrough. Since blockchain did not exist as a fully-formed concept until this Bitcoin paper was released, the two often get mixed up. Make no mistake though, the two are distinct entities.

The individual parts of the blockchain, namely hashes, nodes, and time-stamps had all been around in some form for years. However, it was not until the whitepaper for Bitcoin was released that all of these individual tools coalesced into a single ground-breaking and useable technology. Blockchain has many potentials in addition to many current uses within many disparate fields including but not limited to finance, e-signing, healthcare, real estate, government, and cloud computing.

Why does Simple Sign use Blockchain?

Blockchain allows us to fully and completely guarantee the authenticity and security of your document. When you sign a document using Simple Sign, it becomes sealed in a digital signature. Once a document is sealed it is permanently added to a publically available blockchain as a new individual block. Since these blocks and the blockchain as a whole are permanent and publically available, it allows each individual user to individually prove that their document:

  • has not been falsified or changed
  • was sealed on the date and time specified by the digital signature

To see what exactly a block is, how it’s created, how it’s added to a Blockchain, and what in the world a Merkle tree is, keep reading.

Cryptographic Hash

To start with understanding the components of a blockchain, it helps to start with understanding what a cryptographic hash is.

As anyone with a cursory understanding of computers knows, each individual file at its most basic level is simply a collection of binary data, 1’s and 0’s. Now what if you want to create a specific fingerprint for an individual file? All you have to do is take the binary data which composes a file and apply a specific algorithm to it. The resulting value is a unique fingerprint to that file called a cryptographic hash. 

This website demonstrates this concept in an easy and visual way. 

Ignore the fact that actual algorithms are applied to the underlying 1’s and 0’s of a file and imagine a simple algorithm applied to a sentence instead. To start, let’s imagine the rules of a very basic algorithm: 

  • Use every third letter
  • Ignore case
  • The letter ‘N’ is replaced with ‘X’

Learning about blockchain is fun -> LRXBTOCISX 

Using this algorithm, ‘LRXBTOCISX’ becomes the hash for the sentence ‘Learning about blockchain is fun’. 

Now take into account the fact that the data being passed through an algorithm is an entire file worth of data plus the fact that the algorithm being used is significantly more complex than the one specified above. Then, you can start to get a basic idea of how a hash is created. For Simple Sign, the data being passed through an algorithm is the original document, the verification page (information regarding the document’s signature), and any additional files attached to the document. 

It’s also important to note that the hash created from an individual document is not a recreation of the data itself, nor is it possible to recreate the data from the hash. A hash is irreversible. Each hash is a completely new value that you only get when running the data from a specific file through a specific algorithm.

Merkle Tree

Another important aspect of blockchain’s functionality is the Merkle tree. A Merkle tree is essentially a tree-structure of various individual hashes that all relate to each other in a specific and unchangeable way. 

 Take this tree for example: 

Each hash represented in this tree is what is called a node. Looking at the bottom of the tree, each individual data block at the bottom is an original file. Moving one step up, the hash directly above each file is what is called a leaf. A leaf is simply the lowest node on a tree. Just to reiterate, leaves, nor any node for that matter are actually the original files themselves. They are simply a fingerprint of the original file.

BlockChain - SimpleSign - eSignatures

Hashes themselves can then be combined to make new hashes, one step up the tree. So, adjoining leaves are run through the same algorithm to produce a new node in the tree (Hash 0-0 and Hash 0-1 are combined to form Hash 0).

Hashes are combined in this way until you reach the Top Hash, also referred to as the Merkle Root. If one node or data block changes, it alters all of the subsequent nodes further up in the tree. Therefore, it is impossible to get the same Merkle Root if any hash is changed. If somebody alters any of the individual nodes, the algorithm used in creating a new hash makes it impossible to recreate the same Merkle Root simply by adjusting another node in the tree somewhere else. There is only one way to get each hash, thereby making forgery impossible.

Blocks and Blockchain

So, we finally come to the term blockchain itself. A blockchain is simply a way of storing multiple Merkle trees. Before we get ahead of ourselves, let’s explain what a block is.

Each block can be described as a container data structure, which contains the Merkle Root (Tx_Root), the hash of the previous block in the chain (Prev_Hash), a timestamp, the block number, and a nonce. All of this information is then used to create an individual hash for each block, which is then used to identify it. Here is an example of a block. 

The previous hash is simply the hash of the blockchain immediately preceding the current one. The timestamp is the date and time a block is created and added to the blockchain. The block number is the number of the block in the chain. A nonce is just a number, within a specified range, that is used to help calculate the final hash of the block. There are multiple ways to calculate a nonce, but one common way is simply to count up 1 from the previous nonce. 

A blockchain is a chain of blocks all strung together. The mechanism which binds the blocks together is the inclusion of the previous hash in the calculation of the current block’s hash. The blockchain used by our framework is the Bitcoin blockchain, the same one used by Bitcoin in addition to many other services. The framework we use, Chainpoint, in order to create each block and then publish it to the blockchain is also used by Microsoft, Phillips, Tierion, and hundreds of other companies and services. 

The Bitcoin blockchain is stored not in some third-party database, but is instead shared among a public network of computers. In most conventional databases, there are four types of actions you can perform: create, read, update, and delete (CRUD). With blockchain, it is only possible to create and read. Creating simply adds a new block to the chain, meaning that it is impossible to alter an already published block in any way. 

Verifying Your Documents

Tying It All Together

There are two ways you can verify the security and authenticity of your documents once their fingerprint is published in the blockchain. 

First of all, you can use our own page to verify your documents and make sure that they are in fact the original unaltered versions.

However, if you would like to verify your document independently we also provide you with a unique identifier for the block representing your signed document, which you can find in the archive section of your Simple Sign account.

Hopefully, you now understand at least some of the basics of blockchain and can distinguish a node from a nonce with ease. Yes, this document only touches on the basics of blockchain technology. There is so much more out there for you to explore if you would really like to see all of the nuances that go into such a complex technology. 

We highly recommend you research blockchain on your own if you are still interested. The original Bitcoin whitepaper is one of the best places to start with it being the main originator of the concept. The write-up on Medium, again, also is a great guide with many external links. Otherwise, if you would like more sources or an in-depth discussion on the topic feel free to email us at info@160.153.133.145 and we will be more than happy to help.

Contact us

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111 57 STOCKHOLM
SWEDEN

Email: info@simplesign.io
Phone: +46(0)10 750 09 66