What is blockchain?

Written by Avinassh Bharadhwaj | Published 2 years ago | 6 min read

   


With the awareness about bitcoin and cryptocurrencies growing, Blockchain technology has been the hot topic these days. The demand for Blockchain developer has increased by 500 % over the past years.With this massive increase in the blockchain jobs people are very eager to learn about it.So, the one who take early entry in to the blockchain can benefit a lot.Would you like to be one of the early adopters? I know you definitely want to ? right!

And i promise that i will try to explain blockchain in the simplest way possible ☺.

So, lets dive into the blockchain world.

Blockchain is a consensus based secure decentralized public/private database which stores information immutably over a peer-to-peer network.

First block in the blockchain is called Genesis block. Based on this block additional blocks are added to form a chain of blocks.

Each block in the blockchain is connected to other block sequentially like a chain with the help of previous hash.


(if you want to learn about the Elements of block in blockchain like index, timestamp etc click here)

Due to this if someone tries to hack a block he/she has to completely hack the whole chain which requires 51% of the total computing power of blockchain network.(if you want to learn further about the 51% attack in bitcoin blockchain click here)

This makes hacking a blockchain near to impossible.So, blockchain is more secure and safe compared to a regular database.Whatever you store in blockchain that is referred to as a transaction. Once the information or transaction gets stored in the blockchain it becomes immutable that means no one can change it, which brings more trust and integrity to the data

For example:

Blockchain can be treated as a large size book where:

Section -1 : Deep dive into Blockchain

 

Now, let’s elaborate the terms Decentralize, consensus and distributed ledger.

Decentralize :

Blockchain is decentralized which means no central authority has control over it. For example a bank has a central authority which makes or breaks the rules.

Then the question arises then how does blockchain make decision?? This is where consensus comes into play. Before going to consensus we will take a quick look on, what is Bitcoin mining ?

Mining:


Each block in the blockchain should be mined so as to use it.  Each block in blockchain is mined by solving a computationally expensive problem through the help of machines (containing graphic cards).The miner will be rewarded with bitcoin etc for mining blocks. Reward (bitcoin) is based on the amount of work done by the miner.After the block is mined the transactions done by various users are added to it and that information becomes completely immutable, safe and secure.

Now that we have an idea of what is mining, let’s jump into Consensus

Consensus:


Consensus based techniques are used in order to solve the problems occurring in the blockchain. These techniques help the nodes to come to common decision.

example of conflict: suppose all nodes are at block 100 if three miners mine three blocks at the same time say 101a , 101b, 101c.which block should be added first? How will you resolve this conflict? This problem can be solved by " longest chain rule " In public blockchain like bitcoin blockchain conflicts are often resolved by longest chain rule. Say a miner received a block 101a then he will start building on top of 101a block. In few seconds the miner sees that another block 101b , so miner will keep a eye on the new block. If the next block 102b is detected from other nodes in blockchain that miner will disregard 101a block and will accept the longest chain.

Some of the important and most used consensus algorithms are:

  1. Proof of Work
  2. Proof of Stake

Anything stored in the blockchain becomes immutable that means once stored cannot be changed.

Distributed ledger: 

Blockchain is a distributed ledger that was initially created for the Bitcoin.  In a distributed ledger the data is stored across several systems or nodes.So, In order to hack the data in blockchain all the distributed copies must be hacked at the same time which is practically not possible.


Section – 2 : Types of Blockchain

Now that we have learned basics of blockchain, Lets learn about the types of blockchain..There are basically two types of blockchain public blockchain and private blockchain:

Public blockchain:

  • Anyone can read without explicit authorization
  • Anyone can write without explicit authorization
  • More complex rules for better security
  • Complex consensus algorithm
  • Computationally expensive to mine and add a block
  • No one owns it
  • example: Bitcoin blockchain

 

Private blockchain:

  • Only authorized nodes can read/write the transaction data
  • private hence security can be implemented in a straight forward way
  • One or more private entities own the blockchain
  • Easy or computationally less expensive to add a block
  • example: ICICI Bank’s Blockchain

 

This is all for now, Thanks for reading ☺ If you want to know everything about blockchain do check all of our blogs Don’t forget to give the feedback.!!

Have a nice day ☺ .










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