Blockchain Technology: A Beginners Guide
“As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
– Ian Khan, TEDx Speaker | Author | Technology Futurist
Blockchain technology is still in its infancy stage, however, it is one of the greatest revolutions in the financial sector. Started off as an idea by Stuart Haber and W. Scott Stornetta on the cryptographically secured chain of blocks in 1991, it was first conceptualized by a group (or a person) called Satoshi Nakamoto (who invented bitcoin). Blockchain technology is the backbone technology behind bitcoin which secures it and ensures that no double-spending problem occurs.
Today, most people know about it due to the immense success of bitcoin. But that is only the beginning for this technology. Though it has been one of the most popular technology in the past few years, yet many people are still clueless about the tech or its working. So here is the blockchain technology described in the easiest way.
In layman terms, blockchain is a growing list of “blocks”, that contain data, linked to each other and secured through cryptography. The blockchain is a distributed ledger. Now distributed ledger is a database that is synchronized and shared over various sites, institutions, and geography to allow transactions with the public as eye-witness making cyber-attacks difficult. This stores information and can be used by anyone.
Parts of a block
Now, as said earlier the tech consists of a chain of blocks. Each block can further be said to have three parts-Data, Hash of the block, Hash of the previous block.
Data can be any information that we want to store or transmit. In bitcoin, for example, the data can include the receiver, sender, and a number of bitcoins transferred.
Hash is like a fingerprint, unique to every block. So as soon as we change the data, it’s hash changes as well. This makes the data provided in rest of the blocks invalid. Each block is connected to each other through the previous value of hash stored in it.
Proof of Work
This makes changing data in a block really difficult. However, with the calculation time taken by computers, the hash value can be determined in just a few minutes. Thus, to provide more security to the blocks, the bitcoin technology uses Proof of work.
To add information or a change in some information, the user must first solve a series of puzzles. If correct, this solution is shared with rest of the computers in the network. As soon as the network is verified the information is added as an extra block or the details about the change are added as an extra block and all members are notified.
Thus, proof of work increases the time required to find the hash of different blocks making this technology more secure.
The blockchain is transparent and incorruptible
Since the data is available in the public domain, it can be viewed by everyone. This makes blockchain transparent. Everyone has a right to use it at the same time tampering with the data is simply as difficult. The time and the computing power required to modify the data is just too huge.
Blockchain has provided us with an opportunity to use digital information that can be secured. This has opened a new platform for various applications. Be it e-notary, smart contracts, IoT or simple file storage. The main motto of this technology was for one to access his and control his information in any way he deems fit without the intervention or monitoring of a third party, and it seems that the day where this would become a reality is not far.