What is a blockchain ?
Blockchain is a globally shared transactional database, which means that it is accessible to everyone through the network. There is no law, or regulation guiding it, this makes it difficult to control, change or hack. This system has been proven to be the best way to store and track assets(something physical or non-physical).
Essentially, it is also a digital ledger of transactions that is duplicated and distributed across all the entire networks in a computer systems on the blockchain.
This computer systems are refered to as nodes and they are located around the whole which makes it decentralized network. See more on blockchain here
Source Dreamstime
Now, let’s bring it down to Google doc,when we create a document and share it with a group of people,the doc is conveyed rather than duplicated or moved. This makes a decentralized appropriation chain that gives everybody admittance to the record simultaneously. Here, nobody is locked out anticipating changes from another party, while all alterations to the doc are being recorded continuously, making changes is totally straightforward. So, tampering/changing stuff on the doc will be difficult. You see the power of blockchain!! It solves the problem of manipulation. This has empowers trust, durability and longevity.
Importance of blockchain
- Transparency: Data are recorded in multiple locations
- Efficiency and Speed:
- Automation:
- Security: It creates a record that can’t be altered by anyone. Data integrity!
- Traceability:
How blockchain works
-
Firstly, you need to create a transactions and transmit it to a network of powerful computer systems known as nodes.
-
Secondly, this network of thousands of nodes around the world vie to confirm the transaction using computer algorithms. This is known as bitcoin mining. The miner who first successfully completes a new block is rewarded with bitcoin for their work. These rewards are paid with a combination of newly minted bitcoin and network fees, which are passed on to the buyer and seller. The fees can rise or fall depending on the volume of transactions.
-
Thirdly, after the purchase is cryptographically confirmed, the sale is added to a block on the distributed ledger. The majority of the network must then confirm the sale.
-
Fourthly, the block is permanently chained to all previous blocks of bitcoin transactions, using a cryptographic fingerprint known as a hash, and the sale is processed.
Types of blockchain networks
Source techtarget
-
Public blockchain : This is the first ever blockchain type. This is good but it reduces the power of centralization, which are security and transparency. This has loop holes as it’s non-restrictive and permissionless, this can give anyone that has access to internet the privilege to sign on to a blockchain platform to become an authorized node and can access current and past records and conduct some mining activities, etc as the owner.
-
Private blockchain: This ensures a restrcitive environment which is good for an organization because they can determine which node can view, add or change data, and this also prevent third party from accessing a certain information.
-
Hybrid blockchain: Combination of public and private, you have the ability to specific the type.
-
Consortium blockchain: This has both public and private feature at the same time. it enforces limited access to a particular group, eliminating the risks that come with just one entity controlling the network on a private blockchain.
Common terminologies to note
- Nodes: Any kind of electronic device that maintains copies of the blockchain and keeps the network functioning.
-
Smart contracts: A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network.
-
Blocks: These are bundled transactions, which are distributed to all the participating nodes(computer systems). In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in the chain, so mining a block isn’t easy, especially on large chains.
-
Transactions: This implies the change you want to make, i.e if you want to chnage something in the database, you have to create a transaction which has to be accpeted by all the participating nodes(computer systems).
-
Gas: Upon creation of transaction, a certain amount of fee will be charged which in this case is refered as
gas. So in other words, gas is the fee needed to execute transactions. -
Message call: Contracts are sent via message calls, this message calls contains source, a target, data payload, ether, gas and retrun data.
-
Instruction set: These are set of instructions set inorder to avoid incorrect or inconsistent which could cause consensus problems. These intrsuctions operates on 256-bits words.
-
Nonce: This is randomly generated when a block is created, which then generates a block header hash.
-
Hash: It’s a 256-bit number wedded to the nonce.
-
Miners: The people that creates new blocks on the chain through a process called mining.
- Tokens: This represent didgital assets. Tokens can be music files, contracts, concert tickets, nfts, or even a patient’s medical records.
Got any question or have something to share? please open an issue on my repo with the blog title as the issue name here