Bitcoin is a decentralized digital currency that was created in January 2009 by Satoshi Nakamoto. Besides this full name, the identity of this person is still a mystery to this day. Unlike government-issued currencies, bitcoin has no central authority (builtin, n.d.).
Data storage
Bitcoin makes use of a technology that is called blockchain. Blockchain is a specific type of database. A database is a collection of information that is stored electronically on a computer system. A key difference between a regular database and a blockchain (database) is the way data is stored. As the name suggests, a blockchain stores information in blocks. Each block can hold a limited amount of information, when filled with information, the block is chained onto the previously filled block. In the case of bitcoin, every ten minutes one block is added to the already existing chain of blocks. This is shown in the figure below.
Since the launch of bitcoin back in 2009, 703854 blocks have been created (19:51 06-10-2021) and added to the chain (blockchain.com, n.d.). By the time you read this, more blocks have already been added and you can check the block height out yourself using the link below the article. Besides the information inside each block, each block is also given an exact timestamp. As such, the blockchain is a timeline with records of all information additions, changes, or mutations during its lifetime. In the case of bitcoin, we could go back to block number 1 and see the information in this block. This information is shown below (blockchain, n.d.).
As this is the first block ever created, there is only one transaction that occurred in this block. It shows that 50 bitcoins (BTC) were sent from COINBASE to address 12c6DSiU4Rq3P4ZxziKxzrL5LmMBrzjrJX. If you look at a more recent block, block 500000, we can see a lot more activity. 2700 transactions are recorded on this block (blockchain, n.d.). A subset is shown below.
Here we can see transactions that happened in this block. The top lines show that 0.0804 BTC was transacted from 1LwjoEwYeJXCwBJMeBcojarLp1fgxrPnoZ to 3FnRwsKbyBDUrAdU9KHziTUVnLVdUQVJrs and 5.44 BTC from the same address to 1DQUovque483G1qogond 6ar2jekVbBbQoa. Below this transaction, two other transactions and the addresses that were involved in these transactions are also shown.
It is quite remarkable that a random stranger like me can easily find which transactions happened multiple years ago. This feature makes bitcoin and blockchain technology very transparent. This property among many others, makes me believe that bitcoin and blockchain can have a significant impact on how data is stored on databases in the future.
If you are interested in looking at the block height yourself or search for the transaction in a specific block, you can use this link: https://www.blockchain.com/explorer?view=btc.
References:
blockchain.com. (n.d.). Bitcoin explorer. Retrieved October 6, 2021, from https://www.blockchain.com/explorer?view=btc
builtin. (n.d.). Blockchain Technology Defined. Retrieved October 6, 2021, from https://builtin.com/blockchain
Hi Jelle, Thank you for this very informative post about data stored on the bitcoin blockchain. I agree with the fact that blockchain technology will significantly impact the way data is stored. In my opinion, the biggest advancement of blockchain technology will probably be the fact that it will make financial transactions more transparent and that it cuts out the middleman. The fact that everyone can see the kinds of transactions that were made in the past really excites me. But I don’t think blockchain is quite ready yet to become embraced worldwide. For instance, blockchain technology still has some security, scalability and energy consumption problems. The fact that blockchain consumes so much energy raises some red flags and changes should be made. If these obstacles can be overcome, blockchain will probably become the future of data storage!
Hey Stephan, yeah I agree with the benefit of increased transparency and the removal of the middle with regards to financial transactions due to blockchain. I think a common theme among the latest tech innovations and companies has been to remove the middlemen. If blockchain is added to these innovations, it can truly facilitate these pure peer-to-peer interactions. But as you mention, the tech behind blockchain needs improvement before it can become embraced worldwide. With respect to energy consumption, I think that this mostly applies to bitcoin and to a lower extent to the newer blockchain projects. It seems that Proof of stake or something alike is the preferred choice among the newer blockchain projects. Compared to the Proof of Work from bitcoin, the energy consumption is significantly lower. So in this regard, I believe that this problem will be solved when newer projects are developed for the latest applications.
Hi Jelle, thank you so much for providing such concise and clear information on how data is stored and viewed on blockchain. I also believe that the technology itself has a great potential in many industries such as financial services and public adaministration. However, I am not yet convinced that the decentralisation feature is matured enough to be applied in the financial industry at large. For example, as we can see from the screenshots, we can not trace the identity of the sellers and buyers for each transaction, and this could lead to tromendous frauds and money laundries. The crypto market could also be easily manipulated by centralised exchange due to this reason. Thus, I think it still requires a great deal of time and effort to develope its decentralised use cases.