Blockchain Technology

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Defination

Blockchain are incredibly popular nowdays but, what is blockchain, how did work.

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 was originally intended to timestamp digital documents so that it’s not possible to backdate them or to temper with them. Almost like a notary, however it went by mostly unused until it was adapted by “Satoshi Nakamoto” in 2009 to creat the digital cryptocurrency “Bitcoin”. A blockchain is a distributed ledger that is completely open to anyone. They have an intresting property: once come data has been recorded inside a blockchain, it becomes very difficult to change it.

The previous knowledge about blockchain “it’s an online distributed system which can store information”,  now we gonna add some details, again same it’s an online distributed system which can store information and it’s based on interconnected blocks, which are open to everyone like it’s clear from its name “blockchain” is chain of connected blocks which can store information there are three things on every block first data which is the information we store on block and that depends upon the type of blockchain.

So how does that 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 is stored inside a block depends on the type of blockchain. The Bitcoin blockchain for example stores the details about a transaction in hear, 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 it’s contents and it’s always unique, just as a fingerprint. Once a block is created, it’s 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 soo secure.

Let’s take an example: let suppose we have a chain of 3 blocks, 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 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 cancalculate 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 call proof-of-work.

It’s a mechanism that shows 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 1 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 that blockchains secure themselves and that’s why 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 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 send to everyone on the network. Each node then verifies the block to make sure that it hasn’t been tampered with. If everything checks out, each node adds this block to their own blockchain. All the nodes in the network create consensus, they agree about what block are valid and  which aren’t, blocks that are tampered with will be rejected by other nodes in the network. So to successfully tamper with a blockchain you’ll need to tamper with all block 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, 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. The creation of blockchain technology peaked a lot of people’s interest. Soon, others realize that the technology could be used for other things like storing medical records, creating a digital notary or even collecting taxes.

 

Why do we need blockchain ?

There are several reasons behind every technological change first why do we have to pay a thrid party huge amount of extra fee just to do a transaction between two already agreed parties if we can do that transaction more efficiently and in a secure manner just by depending on technology and the transactions which normally take days to process we can do that in almost real-time by using this technology and without even paying that huge amount of extra fees.

For example: If I am buying a medecine that is comming from the same manifacture which is written on the box or the date which written on the box is correct by just looking at stamps or the lable I can see on the box in the end I must trust the seller. It doesn’t end here, like eBay we don’t know the seller the only things we can see is ratings, reviews and sometimes feedback and we are also not sure it’s the original one or it’s just faked, I am supposed to send the money even before receiving the product what if I never receive the product, will I get my money back, well there are many other need, but I would like to highlight the one which I always feel insecure about my taxes. How, I am sure that the money I am giving to government, they are actually using that thing on me, they even be using it or am I supposed to pay that much money in real or not.

We need this technology because it can save time, it can save money, it can reduce risk, it can increase trust and we don’t need any central authority for that. What can be future of this world if we use this technology in several of these cases, like starting from supply chain management in which we manage the whole process of a product or service from its manufacturing to the delivery so during this process a product goes from multiple channels and every channel is owned by different company or at least different department and if we need informarion about the product sometimes they need some more time to give us information and in the end we will get the information but we delay or sometimes we don’t even get it and also if we implement blockchain or if we put this supply chain management process into blockchain, we can see where exactly our product is how long it will take to reach us. The thing we are sure because of the blockchain the information we are getting it’s not cahnged or it’s not cheated.

So now you know what is a Blockchainis, how it is works on basic level and what problems it solves.

1 Comment

Prem · 04/06/2020 at 11:50 am

Thankx for the information

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