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What is Blockchain and How Does it Work

What is blockchain and how does it work, Blockchain are incredibly popular nowadays. How do they work problems do they solve and how can they be used?

What is blockchain and how does it work, Like the name indicates, a blockchain is a chain of blocks that contains information. This technique was originally described in 1991 by a group of researches 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 a blockchain, it become very difficult to change it.

how does blockchain work?

Well, let’s take a closer look at a block. 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 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 its 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 block.

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.

What is Blockchain and How Does it Work
What is Blockchain and How Does it Work

How do they work problems do they solve and how can they be used?

Hah1Z8FHash6BQ1Hash3H4Q
Previous hash0000Previous hash1Z8FPrevious hash6BQ1

Here we have a chain of 3 blocks. As you can see, each block has a hash and the hash of the previous block. So block number 3 points to block number 2 and number 2 points to number 1. 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 3 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. So to mitigate this, blockchains have something called proof-of-work. It’s a mechanism that slows down the creation of new blocks. In Bitcoin 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 1 block, you will need to recalculates the proof-of-work for all the following blocks.

What is Blockchain and How Does it Work
What is Blockchain and How Does it Work

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 that blockchains secure themselves and that’s 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 joins this network, he gets the full copy of the blockchain. The nude 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 send to everyone on the network. Each node then verifies the block to make sure that it has not been tampered with.

If everything checks out, each node adds this block to their own blockchain. All the nodes in this network create consensus. They agree about what blocks are valid and which are not. Blocks that are tampered with will be rejected by other nodes is the network. So to successfully tamper with a blockchain you will need to tamper 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. So 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 to automatically exchange coins based on certain conditions. More on smart contracts in a later on this post.

How is the creation of blockchain?

The creation of blockchain technology peaked 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 basic level and what problems it solves.

admin
adminhttps://tech1pc.com
I am qualified B tech, has experience with blockchain technology. I have worked with different organizations as a tech and knows how to utilize this tool. I am also certified in blockchain from a recognized institution. My experience and qualifications make him an ideal candidate for any organization that requires blockchain expertise. As Ii continues to work with different organizations, he will continue to gain more experience and knowledge about this tool. This will allow him to provide valuable insights and contributions to any organization he works with in the future.
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