A blockchain is a digital transaction book that is managed by a computer network in such a way that it is difficult to hack or modify. Technology provides a safe way for people to negotiate directly with one another, with no intermediaries such as governments, banks, or other third parties.
The growing list of records, called blocks, is linked together using cryptography. Each transaction is verified, time-stamped and added to a growing data chain independently of peer-to-peer computer networks. Once recorded, the data cannot be changed.
While blockchain technology has become popular with the increasing use of Bitcoin, Ethereum, and other cryptocurrencies, it has promising uses for legal contracts, real estate sales, medical records, and any other industry that needs to authorize and record a series of actions or transactions.
This guide will help you understand what this technology is, what benefits it offers, and how it works. So let’s get started.
Blockchain: A definition:
Blockchain is an information recording system that makes it difficult or impossible to modify, hack, or defraud the system.
A blockchain is essentially a digital transaction book that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and each time one occurs the record of that transaction is added to each participant’s ledger. The decentralized database managed by several participants is called Distributed Ledger Technology (DLT).
Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.
This means that if a block in a chain is changed, it can be seen immediately that it has been manipulated. If hackers wanted to corrupt a blockchain system, they would have to change every block in the chain across all distributed versions of the Chain.
Blockchains like Bitcoin and Ethereum grow steadily and continuously as blocks are added to the chain, which greatly increases the security of the ledger.
Why is there so much hype around blockchain technology?
There have been many attempts to create digital money in the past, but they always have failed.
The overall topic is trust. If someone creates a new currency called the Dollar X, how can we be confident that they won’t give away a million Dollar X or steal the Dollar X for themselves?
Bitcoin was designed to solve this problem by using a certain type of database called a blockchain. Most normal databases, such as a SQL database, have a person in charge who can change the entries (e.g. give himself a million X dollars). Blockchain is different because nobody is in charge; It’s run by the people who use it. Also, Bitcoins cannot be counterfeited, hacked, or spent twice, so the people who own this money can be confident that it has some value.
How Does Blockchain Work?
The whole point of using a blockchain is to let people — in particular, people who don’t trust one another — share valuable data in a secure, tamper-proof way.
Blockchain consists of three important concepts:
Every chain consists of multiple blocks and each block has three basic elements:
- The data in the block.
- A 32-bit whole number is called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
- The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely small).
When the first block in a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and is forever tied to the nonce and hash unless it is extracted.
Miners create new blocks in the chain through a process called mining. On a blockchain, each block has its own unique value and hash, but it also references the hash of the previous block in the chain, so mining a block is not easy, especially with large chains.
The miners use special software to solve the incredibly complex math problem of finding a nonce that generates an accepted hash. Since the nonce is only 32-bit and the hash is 256, there are roughly four billion possible nonce hash combinations that must be extracted before it can be used. When that happens, the miners should have found the “golden nonce” and their block will be added to the chain.
A change to a block at the beginning of the chain requires remembering not just the block with the change, but all blocks that follow it. Because of this, it is extremely difficult to manipulate blockchain technology. Think of it as “safety in math” since finding golden nonces requires an enormous amount of time and computing power.
When a block has been successfully mined, the change is accepted by all nodes in the network and the miner is financially rewarded.
One of the most important concepts in blockchain technology is decentralization, no computer or organization can own the chain, but a ledger is distributed over the nodes connected to the chain. The nodes can be any type of electronic device that stores copies of the chain. Blockchain and keeps the network running.
Each node has its own copy of the blockchain and the network must algorithmically approve all newly mined blocks so that the chain is current, trustworthy, and verified. Since blockchains are transparent, every action in the ledger can be easily checked and viewed. Each participant receives a unique alphanumeric identification number that shows his transactions.
The combination of public information with a system of checks and balances helps the blockchain maintain the integrity and build trust among users. In essence, blockchains can be thought of as the scalability of trust through technology.
To Sum Up:
The tech world has made rapid strides in recent years. With the help of modern technology, the processes and programs are completed in a few seconds. Now you can send and receive money worldwide without burning a hole in your pocket with high transaction fees. , all thanks to the introduction of a historic technology called a blockchain.
Thanks to renowned online courses and training, learning about blockchain is now very easy. Blockchain Council is one such organization that offers prospective apprentices online training and certification programs to provide them with the skills they need for a successful career in the blockchain space.
Keeping in mind the growing demands of blockchain professionals, the Blockchain Council certifications are diversified to meet the unique needs of each candidate. Based on an understanding of what blockchain is, the certification covers a wide variety of topics for entry-level and advanced learners.