In 2008, a scholar known as Satoshi Nakamoto conceived a digital currency called Bitcoin that has since evolved into something much more versatile. The cryptocurrency flows on a hyper-secure channel called blockchain, which has many other types of digital value.
Although Bitcoin was originally invented for the peer-to-peer exchange of digital currency, the technology community has found other applications for it — such as preserving health data, executing smart contracts in the finance sector and even tracing food to prevent contamination. Although it is still an emerging technology in terms of health applications, blockchain can be used for drug traceability, authentication of health records or genomics research.
Here are 15 terms related to blockchain healthcare executives should know. This list was compiled with the help of Bitcoin, the community supported website where users can participate on the network.
1. Cryptocurrency refers to a digital or virtual currency that uses cryptography for security.
2. Bitcoin — capital B — refers to the concept of the bitcoin cryptocurrency, or its entire network. However, bitcoin — with a lowercase b — is a type of digital currency that uses encryption techniques to regulate the generation of units and verify transfers. Its value is based on the properties of mathematics, including algorithms and proofs, rather than physical properties. Back in 2009 when the Bitcoin network launched, one bitcoin was worth about $0.0008. Now, one bitcoin is worth roughly $4,861.22.
3. Cryptography is a branch of mathematics used in online commerce and banking. It allows the creation and verification of mathematical proofs for high levels of security, or in Bitcoin's case, to ensure someone does not spend bitcoin from someone else's wallet.
4. Bitcoin networks are decentralized, which means there is no central, governing company or data warehouse. It operates off a peer-to-peer protocol and users communicate amongst each other instead of through a middleman, like a bank.
5. The blockchain is a distributed system that records all transaction blocks on a digital ledger. It is shared between all network users to verify transactions and prevent double spending. Blockchain is also referred to as a "public ledger."
6. A block is a basic unit in the blockchain. Blocks connect all transactions together and are verified every 10 minutes through a process called mining.
7. Mining is the process by which computers confirm transactions using mathematical calculations. Mining is also the process by which more bitcoins are made. It involves setting up a computer system to solve math problems generated by the network at a consistent rate. The protocol and software are open source to ensure the network remains decentralized.
8. The hash rate is a unit of measure that represents the processing power of the Bitcoin network. For security purposes, the network must make rapid, intense mathematical operations to confirm transactions. These calculations output in hashes per second.
9. Since only 21 million bitcoin can ever be issued due to the mathematics behind the Bitcoin network, the number of bitcoins generated per block is decreased by 50 percent every four years. This is called halving.
10. A transaction is when data is sent to and from one Bitcoin address to another.
11. A Bitcoin wallet is a digital wallet that securely stores, sends and receives bitcoins. A wallet should provide access to both public and private keys.
12. A Bitcoin address is most like a mailing address or an email. It's the only information needed to pay someone with bitcoin. However, each address should only be used for a single transaction, and users employ different addresses for subsequent transactions.
13. A private key is a secret piece of data that enables you to spend from a specific wallet by using a cryptographic signature. It is a randomly generated string of numbers that is mathematically linked to a Bitcoin wallet address. A private key is kind of like a password in that anyone who knows a user's private key can steal that user's bitcoin funds.
14. Signatures allow someone to prove ownership. It is a mathematical mechanism that links your Bitcoin, wallet and private key(s).
15. BIP (Blockchain Improvement Proposal) documents the technical design of Bitcoin's new features to the bitcoin community, including processes or problems that could affect bitcoin protocol.
Click here to read Satoski Nakamoto's original paper on Bitcoin.
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