Many people think of blockchain as the technology that powers Bitcoin. While this was its original purpose, blockchain is capable of so much more despite the sound of the word. there’s not just one blockchain. Blockchain is shorthand for a whole suite of distributed ledger technologies that can be programmed to record and track anything of value, from financial transactions to medical records or even land titles. Blockchains are incredibly popular nowadays. As the name indicates, a blockchain is a chain of blocks that contains information. This technique was initially described in 1991 by a group of researchers. It was originally intended to timestamp digital documents so that it’s impossible to backdate or tamper with them, almost like a notary. However, it went unused primarily until Satoshi Nakamoto adapted it in 2009 to create the digital cryptocurrency Bitcoin. A blockchain is a distributed ledger that is entirely open to anyone. They have an attractive property: once some data has been recorded inside a blockchain, it becomes challenging to change it. So how does that work? Well, let’s take a closer look at a block.
How To Become A Blockchain Developer?
Each block contains some data, the hash of the block, and the previous block’s hash. The data stored inside a block depends on the type of blockchain. The Bitcoin blockchain, for example, keeps the details about a transaction here, such as the sender, receiver, and amount of coins. A block also has a hash. You can compare a Hash to a fingerprint. It identifies a block and its contents and is always unique, just like a fingerprint. Once a partnership is created, its hash is 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 is no longer the same block. The third element inside each block is the hash of the previous block, creating a chain of blocks effectively, and it’s this technique makes a blockchain so secure.
Let’s take an example. Consider we have a chain of 3 blocks. Each block has a hash and the previous block’s hash. So, block number 3 points to block number 2, and number 2 points to number 1. The first block is a bit special and cannot point to previous blocks because it’s the first one. We call this 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 subsequent blocks weak. But using hashes is not enough to prevent tampering. Computers are fast and can calculate hundreds of thousands of hashes per second. You could effectively tamper with a block and recalculate other blocks’ hashes to make your blockchain valid again. So, to mitigate this, blockchains have something called proof-of-work. It’s a mechanism that slows down the creation of new blocks. In Bitcoins case: it takes about 10 minutes to calculate the required proof-of-work and add a new block to the chain.
This mechanism makes it very hard to tamper with the blocks because if you tamper with one block, you’ll need to recalculate the proof-of-work for all the following blocks. So, the security of a blockchain comes from its creative use of hashing and the proof-of-work mechanism. But there is one more way blockchains secure themselves: by being distributed. Instead of using a central entity to manage the chain, blockchains use a peer-to-peer network, and anyone is allowed to join. When someone enters this network, he gets a full copy of the blockchain. The node can use this to verify that everything is still in order. Now let’s see what happens when someone creates a new block. That new block is sent to everyone on the network. Each node then verifies the block to ensure it hasn’t been tampered with.
Each node adds this block to its blockchain if everything checks out. All the nodes in this network create a consensus. They agree about what blocks are valid and which aren’t. Blocks tampered with will be rejected by other nodes in the network. So, to successfully tamper with a blockchain, you’ll need to fiddle with all blocks on the chain, redo the proof-of-work for each block and take control of more than 50% of the peer-to-peer network. Only then will your tampered block become accepted by everyone else, which is almost impossible to do!
Blockchains are also constantly evolving. One of the more recent developments is the creation of smart contracts. These contracts are simple programs stored on the blockchain and can be used to exchange coins automatically based on certain conditions. The creation of blockchain technology piqued a lot of people’s interest. Soon, others realized that the technology could be used for other things, like storing medical records, creating a digital notary, or even collecting taxes. So now you know what a blockchain is, how it works on a fundamental level, and what problems it solves.
Introduction to Blockchain – Wikipedia
What is Blockchain Technology? – IBM
What is blockchain? | Euromoney Learning
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The article was written and optimized by Omar Azhar. He’s an SEO Blog writer and a web developer. Refer to my LinkedIn profile for more details.