What is Blockchain?
Blockchain is exactly what it sounds like, “CHAIN OF BLOCKS” that are linked together and can contain any kind of data.
I know you have heard of people explaining it as a digital ledger that keeps a record of all the data stored since it began to be used. But is it just about record keeping? If not, what’s it actually about?
Blockchain simply can be defined as a distributed digital ledger that keeps a record of each and every event that occurs in a secure and reliable way and which can be traced back easily.
How does it work?
Well, each block consists of a number of transactions, and each transaction is recorded in form of a ‘HASH’. Hash is a unique address assigned to each block when it is mined, any further modification will lead to a change in its hash. All the data stored in the Blockchain is ENCRYPTED using advanced hashing algorithms. The integrity of the nodes (peers) and authenticity of the system is maintained by extensive cryptography key. Every node (peer) participating in the network owns this unique key which ensures its anonymity and authenticity.
All the nodes maintain a copy of Blockchain of their own which is synced with other nodes via a CONSENSUS that all the peers (nodes) agree to. This consensus algorithm is predefined in the Blockchain architecture.
What is Blockchain Architecture?
The architecture of the Blockchain can be visualized as blocks connected in a sequence. Every block contains some data, the block header, and the hash of the previous block. The first block of the chain is called the GENESIS block. A new block is added to the last added block in the chain and is broadcasted over the network. Peers on the network (majority) validate the block and add it to their Blockchain. The process of creating a block is called mining (You must have frequently heard the term ‘Bitcoin Mining’). Various mining algorithms have been developed by Blockchain architects based on consensus protocols. Consensus is the heart of blockchain technology i.e. it’s the protocol that everyone (every node) on the network follows and adheres to.
What features make this Blockchain technology unique?
A few features, that make Blockchain so unique and reliable technology to be used widely, are enlisted below:
1. Immutable: Data on this technology is unchangeable. Every piece of data is hashed and all the blocks are linked together end to end, any minute change in the data i.e. addition, deletion, or alteration (even a full stop) will result in a completely different hash, this is called Avalanche Effect. This will alarm the peers (all the nodes) because now the hash of the block and the previous Hash field of the next block will not match. Hence, no one can tamper with the data on Blockchain.
2. Decentralised: There is no central governing authority for Blockchain technology. No one owns the system, the peers (group of nodes) maintain the network and have the authority over their own data. Peers have direct control of their assets like cryptocurrencies, NFTs, files, documents, images, videos, audio, etc. Their ownership is validated by a private key, which is only known to the owner. Peers validate any data with the help of a signature based on Zero-knowledge-proof (this means that the data can be validated without actually knowing anything about it). This dispersed power of governance among the participating nodes on the blockchain creates a decentralised environment that can be easily relied upon.
3. Secure: All records are individually encrypted which means data in each block is hashed and all the blocks are cryptographically linked with each other. Every node owns a separate copy of the ledger, any tampering can be easily detected on the network. So peers don’t need to worry about their assets being tampered with or stolen. If a hacker tries to tamper with one block he will have to change all the subsequent as well as prior blocks in the blockchain, also he will have to change the entire blockchain on every node in the network which is practically impossible. Even the transactions are validated using the signature concept which is a one-way function and can only be proved by Zero-knowledge-proof as mentioned above. This is how the Blockchain offers a secure system to peers.
4. Distributed: All the nodes in the network have a copy of the ledger for complete transparency. A public ledger is maintained containing information about all the participants in the network and all the transactions, which is immutable. This distributed system corresponds to distributed computational power among the participants. Every node keeps track of the newly added blocks on their end and ensures proper sync by broadcasting every time a block is added. A new block is only added once it gets validation from the majority of the participating nodes. Every node will have to be participative and verify the transactions. Since there is no involvement of intermediaries the validation of transactions takes place speedily. All the participants share equal power and authority over the network and no one is treated special. Thus, the distributed system ensures security, transparency, and equality.
5. Consensus: Consensus in simple terms is the protocol or algorithm that is defined at the core of the blockchain architecture. It is responsible for making the system transparent and more trustworthy. Peers may not trust each other for any decision but can rely on the algorithm or a protocol that is embedded at the network’s core. This algorithm is followed by all the participating nodes which ensures faster and more efficient decision-making ability.
6. Peer-to-peer: Blockchain technology transcends traditional technology by its secure, distributed, and transparent as well as reliable system. To process transactions overseas through the traditional system it takes days for validation, because of the intermediaries involved in it. Blockchain provides peer-to-peer interactions and transactions that require no intermediary. This distributed network ensures speedy validation of transactions due to the consensus already defined. And since everyone in the network has full control and access to their assets they can be transferred easily to any part of the world in the most secure manner, without any third party coming into the picture.
Blockchain provides a trustworthy, reliable, secure, and transparent environment throughout the network. IT IS MUCH MORE THAN JUST A RECORD-KEEPING LEDGER!!!!
Hope this article was helpful.