A blockchain is a distributed permissionless database based on the the model pioneered by the bitcoin protocol.
Users are incentivised to host and secure the database through a process known as 'mining', whereby a node is rewarded for a proof of work with a portion of cryptographically signed unique data. This may be performed by solving a cryptographic puzzle, showing proof of bandwidth or proof of storage. The proof of bandwidth model is similar to that of the popular BitTorrent protocol, which forces users to sufficient data to be eligible to download data.
Ownership of arbitrary 'blocks' of the chain can be cryptographically transferred to different addresses across the network, requiring ultimately at the entire network reaches a consensus over who-owns-what within the network.
Bitcoin itself has enjoyed success as a censorship-resistant digital cash-like currency. Due to the potential level of anonymity offered, it has become the currency of choice of cyber criminals involved with carding and darknet markets and has various associations with the dark web. However it has allowed websites and individuals to accept anonymous payments and donations without creating a digital footprint uses of PayPal or credit cards would otherwise leave, protecting the anonymity of both parties involved from traditional payment system compromise and mass surveillance.
Artists have suggested automatic digital registration of creations could provide digitally signed proofs of creation.
Bitcoin suffers from being both overly hyped and overly criticised. Criticisms include:
- Pump and dump investors caused by lack of traditional regulation
- Price volatility, especially notorious bubbles and crashes
- Use as an investment commodity
- A series of embarrassing security failures (notably Mt. Gox)
- Use by cyber criminals
- Technophilia by its advocates
- Criticism of the anarchist or libertarian politics advocated by many of its users
- Dysfunction of its centralised components, notably core development team and increasingly centralised mining pools