Blockchain technology is incredibly popular nowadays. But what is a blockchain? How does it work, what problems are it solved and how can it be used? As the name indicates, a blockchain is a chain of blocks that contains information. This technique was originally described in 1991 by a group of researchers and it was originally It aims to put a time stamp for digital documents so that it is not possible to backdate them Or mess with it. Almost like a notary. However it passed mostly unused until it was adapted by Satoshi Nakamoto in 2009 for Creating a digital cryptocurrency Bitcoin. A blockchain is a distributed ledger that is completely open to anyone. They have the premium property: once some data has been recorded inside the blockchain, It becomes very difficult to change it.
How is this done? Well, let’s take a closer look at the block. Each block contains some data, block hash and previous block hash. The data that is stored inside a block depends on the type of blockchain. The Bitcoin blockchain for example stores details of the transaction in here, such as As the sender, the recipient, and the amount of cash.
The block also has hash. You can compare the hash for a fingerprint. It identifies the mass and all of its contents and it is always unique, just as a fingerprint. Once a block is created, it’s hash is being computed. Changing something within a block will cause the hash to change. So in other words: Hash is very useful when you want to detect changes in blocks. If a fingerprint changes a block, it is no longer the same block. The third component within each block is the hash of the previous block. This effectively creates a chain of blocks and it’s this technology that makes the blockchain Very safe. Let’s take an example. Here we have a series of 3 blocks. As you can see, each block has a hash and a hash of the previous block. Up to a block number of 3 points to block 2 and 2 points, to reach 1. Now the first block is a little special, it cannot refer to the previous blocks for it first one.
We call this block Genesis. Now let’s tell you that second tampering is prevented. This causes block fragmentation to change as well. In turn that would make block 3 and all following invalid blocks because they were no longer stored A valid hash of the previous block. Even changing one block will make every following block invalid. But using hash is not sufficient to prevent tampering. Computers these days are very fast and can compute hundreds of thousands of hashes per second. Can effectively tamper with a block and calculate all other block hashes To make your blockchain valid again. In order to reduce these, blockchains have a thing called Proof of Work. It is a mechanism that slows down the creation of new blocks.
In the case of Bitcoins: It takes approximately 10 minutes to calculate the required proof of work and Add a new block to a chain. This mechanism makes it very difficult to tamper with the blocks, because if you are messing around 1 block, you will need to recalculate Proof of Work for all of the following blocks. So blockchain security comes from the innovative use of hashing and validation work mechanism.
But there is one more way in which blockchains secure themselves and that is from being distributed. Instead of using a central entity to manage the chain, blockchains use peer-to-peer Network and anyone are allowed to join. When someone joins this network, he gets a full copy of the blockchain. This node can be used to verify that everything is still in order. Now let’s see what happens when someone creates a new block.
It sends that new block to everyone on the network. Each node then checks a cluster to make sure that it has not been tampered with. If everything pulls each node, this block adds to their blockchain. All nodes in this network create consensus. They agree on what blocks are valid and which are not. Blocks that are tampered with will be rejected by other nodes in the network. To successfully tamper with the blockchain, you’ll need to mess around with all of the blocks on Chain, return it to validate the action for each block and control over 50% of its peer’s counterpart network. Only then will your block become tampered by everyone.
This is almost impossible to do! Blockchains are also constantly evolving. One of the most recent developments is the creation of smart contracts. These contracts are simple programs that are stored on the blockchain and can be used for Automatically exchange currencies based on confirmed conditions. More information on smart contracts in a video later. The creation of blockchain technology has peaked a lot of people’s interest. Soon, others realized the technology could be used for other things like storage Medical records, creating a digital notary or even collecting taxes. So now you know what a blockchain is, how it works on and what basic level problems are It does not solve. Want to learn how you can implement a simple blockchain with javascript? Then checkout this video here. And as always: Thank you very much for watching.
