How Does Blockchain Work?

The peer-to-peer networks that process instructions and maintain records in a blockchain depend on a few cryptographic principles

Jim Sinegal 4 June, 2018 | 8:15AM
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bitcoin blockchain blockchain has the potential to disrupt economic activities ranging from simple payments to the structure of a corporation as it currently exists

The peer-to-peer networks that process instructions and maintain records in a blockchain depend on a few cryptographic principles and the mechanism laid out in bitcoin creator Satoshi Nakamoto’s 2008 white paper. One of these principles is private key cryptography, which allows two-way message transmission using public and private keys.

In one example, a sender can encrypt a message with the recipient’s public key, ensuring that only the intended recipient, who possesses the associated private key, can decrypt it. Conversely, a user can use his private key to encrypt a message.

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About Author

Jim Sinegal  Jim Sinegal is the associate director of the financial team at Morningstar.

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