In a narrow sense, blockchain is a kind of chained data structure that combines data blocks in sequential order according to the time sequence. It is a distributed ledger that is tamper-resistant and unforgeable guaranteed by cryptography.

In a broad sense, blockchain technology uses a chain block data structure to verify and store data, uses a distributed node consensus algorithm to generate and update data, uses cryptography to ensure data transmission and access security, and uses smart contracts composed of automated script code to program and operate data. It is a brand-new distributed infrastructure and computing method.

Blockchain mainly solves the problem of transaction trust and security. Therefore, it proposes four technological innovations for this problem:

1. Distributed Ledger: Transaction accounting is completed by multiple nodes distributed in different places, and each node records a complete account. Therefore, they can all participate in supervising the legality of transactions and also testify for them.

2. Asymmetric Encryption and Authorization Technology: The transaction information stored on the blockchain is public, but the account identity information is highly encrypted and can only be accessed with the authorization of the data owner, thus ensuring data security and personal privacy.

3. Consensus Mechanism: This is how all accounting nodes reach a consensus to determine the validity of a record. It is both a means of identification and a means of preventing tampering. Blockchain proposes four different consensus mechanisms, suitable for different application scenarios, achieving a balance between efficiency and security.

4. Smart Contracts: Smart contracts are based on this credible and tamper-resistant data and can automatically execute some pre-defined rules and terms. Taking insurance as an example, if everyone's information (including medical information and risk occurrence information) is true and credible, it is easy to conduct automated claims settlement in some standardized insurance products.

Blockchain is divided into three categories, which are introduced in detail in the book "Blockchain: Defining the New Pattern of Future Finance and Economy" published by Currency. Among them, hybrid blockchain and private blockchain can be considered as private chains in a broad sense.

1. Public Blockchain:

Any individual or group in the world can send transactions, and the transactions can be effectively confirmed by the blockchain. Anyone can participate in its consensus process. Public blockchain is the earliest blockchain and the most widely used blockchain. Major virtual digital currencies of the Bitcoin series are all based on public blockchains. There is one and only one blockchain corresponding to that currency in the world.

2. Consortium (Industry) Blockchain:

Multiple pre-selected nodes within a group are designated as bookkeepers. The generation of each block is jointly determined by all pre-selected nodes (pre-selected nodes participate in the consensus process). Other access nodes can participate in transactions but do not participate in the accounting process (essentially, it is still hosted accounting, but it becomes distributed accounting. The number of pre-selected nodes and how to determine the bookkeeper of each block become the main risk points of this blockchain). Anyone else can perform limited queries through the open API of the blockchain.

3. Private Blockchain:

Only uses the general ledger technology of the blockchain for accounting. It can be a company or an individual, enjoying the write permission of the blockchain exclusively. This chain is not much different from other distributed storage solutions. (Dec 2015) Conservative giants (traditional finance) all want to experiment with private blockchains, while the application of public chains such as Bitcoin has been industrialized. The application products of private chains are still being explored.

1. Decentralization: Due to the use of distributed accounting and storage, there is no centralized hardware or management agency in the system. The rights and obligations of any node are equal. The data blocks in the system are jointly maintained by nodes with maintenance functions in the system.

2. Openness: The system is open. Except that the private information of the transaction parties is encrypted, the data of the blockchain is open to everyone. Anyone can query the blockchain data and develop related applications through open interfaces. Therefore, the entire system is highly transparent.

3. Autonomy: Blockchain adopts norms and protocols based on consensus (such as a set of open and transparent algorithms) to enable all nodes in the system to exchange data freely and securely in a trustless environment, changing the trust in "people" to trust in machines. Any human intervention does not work.

4. Information Immutability: Once the information is verified and added to the blockchain, it is stored permanently. Unless more than 51% of the nodes in the system are controlled at the same time, modifications to the database on a single node are invalid. Therefore, the data stability and reliability of the blockchain are extremely high.

5. Anonymity: Since the exchange between nodes follows a fixed algorithm, their data interaction is trustless (the program rules in the blockchain will automatically judge whether the activity is valid). Therefore, the counterparties do not need to disclose their identities to make the other party trust them, which is very helpful for the accumulation of credit.