What is Blockchain? For absolute beginner.

Blockchains are incredibly popular nowadays. But, what is a blockchain, how do they work, what problems do they solve and how can they be used?

What is Blockchain?

Like the name indicates, a blockchain is a chain of blocks that contains information. This technique was originally introduce in 1991 by a group of researchers and was originally intended to timestamp digital documents so that it's not possible to backdate them or to tamper with them. Almost like a notary. However it went by mostly unused until it was adapted by Satoshi Nakamoto in 2009 to create the digital cryptocurrency Bitcoin.
A blockchain is a distributed ledger that is completely open to anyone. They have an interesting property; once some data has been recorded inside the blockchain, it becomes very difficult to change it.

How does Blockchain works?

So how does that work well let's take a closer look at each components. Each block contains some data ‘the hash’ of the block and the hash of the previous block. The data that is stored inside a block depends on the type of blockchain. The Bitcoin blockchain for example stores the details about a transaction in here, such as the sender receiver and the amount of coins. A block also has a hash. You can compare a hash to a fingerprint. It identifies a block and all of its contents and it's always unique just as a fingerprint. Once a block is created its hash is being calculated. Changing something inside the block will cause the hash to change. So in other words hashes are very useful when you want to detect changes to blocks. If the fingerprint of a block changes, it no longer is the same block. The third element inside each block is the hash of the previous block. This effectively creates a chain of blocks. And it's this technique that makes a blockchain so secure. Let's take an example:

We have a chain of three blocks. As you can see each block has hash and the hash of the previous block. So block number three points to block number two and number two points to number one. Now the first block is a bit special it cannot point to previous blocks because it's the first one. We call this block the Genesis block. Now let's say that you tamper with the second block; this causes the hash of the block to change as well. In turn that will make block three and all following blocks invalid because they no longer store a valid hash of the previous block. So changing a single block will make all following blocks invalid. But using hashes is not enough to prevent tampering. Computers these days are very fast and can calculate hundreds of thousands of hashes per second. You could effectively tamper with a block and recalculate all the hashes of other blocks to make your blockchain valid again.

Proof-of-work in Blockchain.

So defend the blockhain, there is a technique called 'proof-of-work'. It is a mechanism, that helps  by slowing down the process of creating additional blocks. In bitcoin, the process of complete calculation to adding up the created bock to the chain takes up to 11 minutes.  Due to proof-of-work mechanism technique it makes it harder every time additional block is created. It also secure the existing blocks from tampering; because if it is tampered then all the hashes of other blocks need to be calculated again and reconstruct the chain, it make the other hashes secure and create a virtual vault. Decentralization is another method of securing blockchain, it's my favorite. It doesn't allow the blockchain to be controlled by a centralized entity. Instead it uses peer-to-peer network and everyone is allowed to join. Whenever a entity is added, then that entity is provided with full copy of the blockchain. That distribute the control and information over large number of entity. Then nodes can be used to check that everything is in order.

Creating new block in Blockchain.

When a new block is created, that block is sent to the network, visible to every users. Each nodes are
used to identify the the block and check if that has been tampered with. If nodes verify everything is ok, then a new block is registered to the blockchain. Consensus is also created, which also helps to verify which block is valid and which is not. Other nodes will reject the block if they identify it as tampered block. If a blockchain is to tampered then, all blocks need to be tampered, redo proof-of-work of all the existing blocks and take control of more than 50% of the peer-to-peer network. only then tampered block is accepted in the network. Practically speaking, this is almost impossible to do; specially with large networks with decentralized control. That's make the blockchain fully secure.

Evolution of Blockchain.

After the introduction to cryptocurrency, extensive research has been done in the blockchain technology. New developments such as coin-wallets, smart contracts, etc. have been done, which expand the horizon of application of blockchain technology. For example, smart contract are blockchain based programs, which bring automation in the exchange of coins based on certain programming presets, depending on the fulfillment of the contract. Expert economist believe that it can bring revolution on how the current banking system works. Many people also believe that this technology can be used in many other different aspects of society, from operation of government to collecting taxes.
This was a basic introduction to different aspects of blockchain technology.

We will publish about blockchain usage in Different fields; i.e. Finance, Government services and communication in another article. If you have any query or feedback feel free to contact us through our contact us page. 

What is Blockchain? For absolute beginner. What is Blockchain? For absolute beginner. Reviewed by Author-RPD on April 25, 2019 Rating: 5

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