The Blockchain. Simply Explained.
Exploring new technology on the block.
What is blockchain?
A blockchain is a digital ledger that keeps track of transactions and records them in chronological order. It’s a public record of all the transactions within a network. Each transaction is saved on a block, which includes details on the sender and receiver of the specified information, and amount sent (if used within cryptocurrency space). The blocks are then linked together to form a chain via cryptographic hashes.
Cryptographic hashing is a way of performing mathematical functions on data. The goal of cryptographic hashing is to take a piece of data and create a unique fingerprint of it, known as a hash, which can be used as proof that the original data has not changed.
A hash is a string of numbers and letters that represents an encrypted version of some other string. The encrypted version changes completely when the original string changes in any way, even by one character. This makes it easy to tell if two strings are identical or not.
For example, if I were to encrypt the word “hello” using SHA-256, I would get:
If I change “hello” to “hallo”, then I get:
SHA-256, Secure Hashing Algorithm, converts a string of data into a 256-bit hash. The output will always be 256 bits long, regardless of the length of the original data.
Cryptographic hashing is a way to verify the legitimacy of transactions on the blockchain. In other words, cryptographic hashing is used to verify that a transaction has not been tampered with and that it came from its original source. This ensures that all transactions are legitimate, and that no one can change them without being noticed.
For example, imagine I want to send money over the Internet using Bitcoin. First, I have to tell the network who I am and what kind of transaction I’m trying to make. Then my computer uses SHA-256 to create a unique fingerprint for my transaction. If anyone tries to change my transaction after it’s been signed by my computer and sent out into the network for approval, then their changes will be rejected by all other computers because they don’t match up with what each one knows about my transaction history (or ledger).
Network Approval — Mining
In order to legitimize all transactions, the nodes are used.
Nodes are computers or devices through which users can access blockchain technology. These nodes verify transactions and add them to the blockchain. They also act as a peer-to-peer network by sharing information with each other.
The blockchain is constantly updated and disseminated to numerous devices because each node has its own copy. This ensures that no one person has control over it and every person can see what has happened in the past, present, and future.
Each time an update is made to any transaction on the blockchain, it must be verified by various nodes on the network before it can be considered valid. If one or more of these nodes do not verify that the transaction has been made correctly, they will reject it as invalid and will not accept it into the chain.
The reason why this works so well is because each node receives an updated copy of the blockchain every minute or so (depending on how many blocks have been added since last time). This means that if someone tried to make changes without permission, there would be no way for them to keep up with everyone else who has already received updated copies.
The people who own these computers are incentivized to verify transactions through rewards. This process is known as ‘proof of work’.
Mining is another term for verifying transactions on the blockchain. Miners are the ones that run the nodes. Verifying means solving complex puzzles which are designed to be hard to solve, but easy to verify once they’re solved. The first miner to solve the puzzle gets to add their block of transactions to the chain, and they get paid in cryptocurrency as a reward.
What makes the blockchain decentralized?
Decentralization eliminates the need for a central authority or middleman. This makes the system more democratic and efficient, as there is no need for third-party verification.
1. Transactions are verified by miners, who are rewarded with cryptocurrency for verifying the blocks’ authenticity. This creates a network of participants who have a vested interest in maintaining the security and integrity of the blockchain.
2. The blockchain is public (within a specific network), which means that anyone can access it and view its contents. This transparency helps to ensure that there is no central point of control or manipulation.
Future of the blockchain
1. Blockchain technology can be used to create a tamper-proof record of transactions. This makes it ideal for recording and tracking financial transactions, medical records, or any other type of data that needs to be securely stored and tracked.
2. Blockchain technology can be used to create digital currencies, such as Bitcoin. These digital currencies can be used to facilitate transactions between parties without the use of a middleman, like a bank.
3. Blockchain technology can be used to create “smart contracts.” When certain criteria are met, these contracts are automatically executed.
Disclaimer: The information contained in this blog is strictly for educational and entertainment purposes only. All views expressed in this blog are my own and do not represent the opinions of any entity whatsoever with which I have been, am now, or will be affiliated.