Blockchain

Blockchains, an innovative approach that comes from incorporating old technology in new ways is to recognize the fifth revolution in computing. Blockchain is an immutable, Distributed Ledger or you can say it a distrusted database that a group of individuals controls and that store and share information.

To understand the scenario and conditions where Blockchain is useful and unique from already existing approaches, lets’ try to have a look at the problems which is eliminated in the world of Blockchain.

Usually, we are using an approach called the ‘Client-Server Approach’ where all the information (data) is stored in a central location called Server. Just like Facebook, Google, Yahoo, etc. Clients request information and Server returns. Any client if somehow is able to change the information then all the other clients will receive the changed/updated data instead of the original one. Also, the server owner(s) can do the same. Besides these, the data can also tamper while traveling from the networks. Thus we can see that this approach can’t be trusted and can’t be used for sensitive applications.

To eliminate the single ownership of the data and centralization of the storage Blockchain came into existence. It has its own unique way to store and change the information. Instead of storing data in a central location, it puts a copy of the database in all clients network and this is almost next to impossible to delete or change the data in Blockchain.

A Blockchain is a peer-to-peer network that has no central authority to manage the data flow. Having a large distributed networks of independent users where networks are in more than one location is also a way to remove the central control while maintaining data integrity.  Each participant in the network cooperates in keeping a full and unaltered history of each transaction or entry that is made within the database which they share.  These networks are known as nodes.

Adding entry in the Blockchain is called also transaction. Users in the network who have validation control verify the new adding transaction. Every Blockchain has a different spin on how this work and who can validate a transaction, like in some Blockchains it is done via Proof-of-work (POF) and some use Proof-of-stack (POS) and so on.

 

There are three types of Blockchains:

1.     Public Blockchains: These are open for everyone to participate at any level and their code is open source code maintained by their community, e.g. Bitcoin.  Tempering data is almost impossible in this network. This is the strongest Blockchain type in terms of security but efficiency in terms of use of the resource is lower as compared to the private and consortium blockchains.

 

2.     Permission-Based or Consortium Blockchains: Such as Ripple, control roles that individuals can play within the network. The Code of this type of Blockchains may or may not be open source.

 

3.     Private Blockchains: Also known as Distributed Ledger Technology (DLT).  These are small in size and do not utilize a token or cryptocurrency and their membership is also closely controlled. Consortiums that have trusted members are in favor of these types of Blockchains, this is good for the trade of confidential information.

 

All the above types of Blockchains use cryptography to allow participants on any network to manage the ledger in a trusted way.

There are three main elements of a Blockchain and these are as follows:

a.     Block

b.     Chain

c.     Network

Block:
Block is a list of transactions recorded into a digital ledger in a given time. The transaction can be think as adding a record to the ledger, and timestamp, etc just like this happens in a financial ledger.

Chain:
The hash is the most complex concept in the world of Blockchain and also can be considered the brain of Blockchain. Every Blockchain on the network has a unique address called a hash. The current hash of a block is the previous hash of the next block and so on. The hash links one block with another mathematically chaining/linking them together. In fact, this chaining logic builds the mathematical trust between the blocks.

Hash is a mathematical function that takes an input and generates one output in the form of a string in a fixed bit length. Hashing is a one-way function that can’t be decrypted/re-versed. In Blockchain data of the current block is given as an input to the hash function and generates a unique hash for the block. Which will be previous hash for the next hash.

Network:
The full nodes in the blockchain are known as network. These are the computers running an algorithm this is securing the network. Each network has a complete record of the activities or transactions that were recorded in that Blockchain.

The identity of the participants are not disclosed in the blockchain. Instead of the name, address, etc Blockchain uses the hash for communication. Hash is unique in the entire Blockchain network.

Bitcoin Blockchain uses Proof-of-work  (POS) and Ethereum Blockchain to use Proof-of-stack (POS) machinimas. These blockchains are generally considered to be fully decentralized. For both Proof-of-work and proof-of-stack, a substantial amount of computational power is required.

A working example of Blockchain for a simple transaction can be demonstrated as below:

      i.         Mr. A wants to send money to Mr. B.

    ii.         The Transaction is represented as Block.

   iii.         The Block is broadcasted to every node in the network.

   iv.         Sufficient miners approve the transaction.

     v.         The Transaction is added to Blockchain.

   vi.          Mr. B receives the money.

 

Mining in Blockchain:

Mining is of the major concept in Blockchain. This means to validate the new Block before making this to the part of Blockchain. There can be many minors who have the right to validate the new block. The working method of Different blockchains is slightly different from each other. In some Blockchain when new Block is adding, all the minors try to validate the new block with the use of Proof-of-work (POS). The first validator minor will be the winner, and there is a commission/reword for the wining minor for that Block. This block will be the part of the blockchain and the effort of all other minors will be discarded. This is very drawback in terms of computation as this required huge resources.