IEEE Consumer Electronics Magazine - July 2018 - 8

TRANSACTIONS
The blockchain enables the sharing and exchange of information among nodes on a P2P basis. This exchange takes place
by means of files containing transfer information from one
node to the other, generated by a source node and broadcast to
the entire network for validation. The current state of blockchain is represented by these transactions, which are continuously generated by the nodes and then congregated in blocks.

In the case of bitcoin, each transaction represents the transfer
of currency from one node to another. All nodes are aware of
the current balance at each address and maintain a copy of the
existing blockchain, which is the log containing the history of
previous transactions. The state of the blockchain changes
after each transaction [8]. With a huge number of transactions
generated each second, it is very important to validate and
verify the genuine ones and discard those that are fake.

CONSENSUS MECHANISM
Shared and
Distributed
Decentralized,
P2P
Communication

Consensus-Based
Updating

Sequential and
Timestamped

Immutable and
Transparent Log

Minimized
Third-Party Interference
and Dependency

Irreversible and
Auditable
Cryptographically
Secured Digital
Ledger

FIGURE 1. The vital blockchain characteristics.

When nodes begin sharing and ex changing data via a blockchain platform, they do not have a centralized
party to regulate and resolve disputes
or safeguard against security violations. A mechanism is needed to keep
track of the flow of funds and ensure
an unassailable exchange to avoid
fraud, such as double-spending attacks
[9], [10]. All nodes should agree on a
common content-updating protocol for
this ledger to maintain a consistent
state, and blocks should not simply be
accepted as a part of the blockchain without majority consent. This is called a
consensus mechanism, by which blocks
are created and added to the existing
ledger for future use.
In the case of bitcoin, the recipients, after signature verification, might
redeem outputs multiple times for use
in subsequent transactions, as they
would seem valid by individual recipients.

The requested transaction is
broadcast to a P2P
network consisting of computing
machines (i.e., nodes).
A transaction is
requested by a computing
machine (i.e., node).

Transaction Validation
(The network of nodes
validates the transaction
as well as the status of
the user who requested the
transaction using a validation
algorithm, e.g., public key
cryptography.)

P2P Network of Nodes
The verified transaction is
combined with other verified
transactions to create a new block
of data for the blockchain.

Block Validation
(Using Consensus
Algorithm, e.g.,
Proof of Work)
A Block

A validated block is added to the
existing blockchain in a permanent and
unalterable way.

Verified Transactions
New Block

Oldest Block

Blockchain (i.e., Ledger)
FIGURE 2. An overview of the blockchain.

8 IEEE Consumer Electronics Magazine

july 2018

A Verified Transaction
(e.g., Cryptocurrency,
Contracts, Records)

The transaction is complete.

Table of Contents for the Digital Edition of IEEE Consumer Electronics Magazine - July 2018