How open source underpins blockchain technology

Openness, not regulation, is what creates blockchain's security and reliability.
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People are often surprised when they find out that blockchain technology, which is known for its security, is built on open source software code. In fact, this openness is what creates its security and reliability.

One of the core values of building anything as open source is gaining efficiency. Creating a community of developers with different perspectives and skillsets, all working on the same code base, can exponentially increase the number and complexity of applications built.

Open source: more common than people think

One of the more popular operating systems, Linux, is open source. Linux powers the servers for many of the services we feel comfortable sharing personal information on every day. This includes Google, Facebook, and thousands of major websites. When you're interacting with these services, you're doing so on computer networks that are running Linux. Chromebooks are using Linux. Android phones use an operating system based on Linux.

Linux is not owned by a corporation. It's free to use and created by collaborative efforts. More than 20,000 developers from more than 1,700 companies have contributed to the code since its origins in 2005. 

That's how open source software works. Tons of people contribute and constantly add, modify, or build off the open source codebase to create new apps and platforms. Much of the software code for blockchain and cryptocurrency has been developed using open source software. Open source software is built by passionate users that are constantly on guard for bugs, glitches, or flaws. When a problem is discovered, a community of developers works separately and together on the fix.

Blockchain and open source

An entire community of open source blockchain developers is constantly adding to and refining the codebase.

Here are the fundamental ways blockchain performs:

  • Blockchain platforms have a transactional database that allows peers to transact with each other at any time.
  • User-identification labels are attached that facilitate the transactions.
  • The platforms must have a secure way to verify transactions before they become approved.
  • Transactions that cannot be verified will not take place.

Open source software allows developers to create these platforms in a decentralized application (Dapp), which is key to the safety, security, and variability of transactions in the blockchain.

This decentralized approach means there is no central authority to mediate transactions. That means no one person controls what happens. Direct peer-to-peer interactions can happen quickly and securely. As transactions are recorded in the ledger, they are distributed across the ecosystem.

Blockchain uses cryptography to keep things secure. Each transaction carries information connecting it with previous transactions to verify its authenticity. This prevents threat actors from tampering with the data because once it's added to the public ledger, it can't be changed by other users.

Is blockchain open source?

Although blockchain itself may not technically be open source, blockchain systems are typically implemented with open source software using a concept that embodies an open culture because no government authority regulates it. Proprietary software developed by a private company to handle financial transactions is likely regulated by government agencies. In the US, that might include the Securities and Exchange Commission (SEC), the Federal Reserve Board, and the Federal Deposit Insurance Corporation (FDIC). Blockchain technology doesn't require government oversight when it's used in an open environment. In effect, the community of users is what verifies transactions.

You might call it an extreme form of crowdsourcing, both for developing the open source software that's used to build the blockchain platforms and for verifying transactions. That's one of the reasons blockchain has gotten so much attention: It has the potential to disrupt entire industries because it acts as an authoritative intermediary to handle and verify transactions.

Bitcoin, Ethereum, and other cryptocurrencies

As of June 2020, more than 50 million people have blockchain wallets. Most are used for financial transactions, such as trading Bitcoin, Ethereum, and other cryptocurrencies. It's become mainstream for many to check cryptocurrency prices the same way traders watch stock prices.

Cryptocurrency platforms also use open source software. The Ethereum project developed free and open source software that anyone can use, and a large community of developers contributes to the code. The Bitcoin reference client was developed by more than 450 developers and engineers that have made more than 150,000 contributions to the code-writing effort.

A cryptocurrency blockchain is a continuously growing record. Each record is linked together in a sequence, and the records are called blocks. When linked together, they form a chain. Each block has its own unique marker called a hash. A block contains its hash and a cryptographic hash from a previous block. In essence, each block is linked to the previous block, forming long chains that are impossible to break, with each containing information about other blocks that are used to verify transactions.

There's no central bank in financial or cryptocurrency blockchains. The blocks are distributed throughout the internet, creating a robust audit trail that can be tracked. Anyone with access to the chain can verify a transaction but cannot change the records.

An unbreakable chain

While blockchains are not regulated by any government or agency, the distributed network keeps them secure. As chains grow, each transaction makes it more difficult to fake. Blocks are distributed all over the world in networks using trust markers that can't be changed. The chain becomes virtually unbreakable.

The code behind this decentralized network is open source and is one of the reasons users trust each other in transactions rather than having to use an intermediary such as a bank or broker. The software underpinning cryptocurrency platforms is open to anyone and free to use, created by consortiums of developers that are independent of each other. This has created one of the world's largest check-and-balance systems.

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Matt Shealy - President
Matt Shealy is the President of Chamber specializes in helping small businesses grow their business on the web while facilitating the connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide. Matt is a seasoned marketer and technologist working with technology powerhouses like SAP and Campaign Monitor.

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