While the technical design of the blockchain technology (Nakamoto 2008; Narayanan et al. 2016) forms a crucial element of the project in general, its in-depth introduction is beyond the scope of this proposal. For the purposes of this text, let it be suffice to say that blockchain is an append-only, distributed database which is collaboratively stored, maintained, and updated by all of its users. Blockchain technology uses complex cryptographic methods to ensure that this decentralized distributed database is secure and resistant to any individual effort to tamper with, or falsify the stored data.
Information on the blockchain is represented as tamper-resistant cryptographic tokens which guarantees the technical authenticity of information. Blockchains record the allocation of these tokens among anonymous accounts, automatically record all the exchanges of these tokens between accounts, and update each copy of the database at each node accordingly. If there is a conflict between the different copies, (because, for example, someone is trying to tamper with the data), an automatic consensus mechanism ensures that only those updates get permanently recorded on the blockchain that are consistent with the earlier, stored versions of the database. The technology ensures that as long as the majority of the nodes in this computer network are honest, it is mathematically unfeasible to falsify, censor, or tamper with the data (Narayanan et al. 2016).
Blockchain technology was developed as the underlying infrastructure for the first major cryptocurrency, Bitcoin. Bitcoin is a global, decentralized, distributed financial network, which allows users to store, send and receive a virtual financial instrument called Bitcoin without the involvement of banks, or other institutions of the existing financial and payment networks. In the case of Bitcoin, the blockchain records account information, and the transactions of the payment tokens between accounts. Bitcoin is a successful proof of concept, demonstrating that the technology is safe and secure: it is impossible to alter the blockchain data, forge fake units of the cryptocurrency, or conduct fraudulent transactions (i.e., spend the same bitcoin twice).
Bitcoin and subsequent blockchain applications proved that (1) the cryptographic principles on which the distributed blockchain database concept rests are sound, and (2) it is possible to implement those principles in practice via open source software. In addition, in the last few years we have witnessed (3) the emergence of governance structures which could organize the ongoing availability of key resources (i.e., capital, leadership, expertise, trust, transaction verification), which are required for the long term existence and continued development of the blockchain technology.