BLOCKCHAIN


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, tamperproof way.
— MIT Technology Review

What is Blockchain Technology?


Blockchain is also referred to as Distributed Ledger Technology (DLT). The basic feature is to record any digital asset in an unalterable way. Decentralization across multiple nodes makes the information transparent. Protection of data is enabled through cryptographic hashing.

Let us take the example Google Doc to understand this concept further. We can create a document and share it with a group without having to individually send to each person. This creates a decentralized distribution chain in which each person can access the document and work on it simultaneously. Each party can modify the document independent of others in real-time and everyone can view the modifications i.e. full transparency.

BLOCKCHAIN: AN OVERVIEW

Using Blockchain, digital assets are stored in a distributed manner to due to decentralization and each node is given full real-time access to the records. Such transparency ensures integrity of the information which basically builds trust among all participants. Thereby Blockchain reduces risk and fraud.

Components of a Blockchain

  1. Blocks
    Blockchain consists of multiple blocks and each block contains three basic elements:
    • The data within the block.
    • A 32-bit whole number called a nonce. A nonce is randomly generated at the time of block creation which then generates a “block header” hash of 256-bits
    When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash.
  2. Miners
    Miners create new blocks on the chain through a process called mining. 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 is cumbersome on large chains. When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.
    Making a change to any block earlier in the chain requires re-mining not just the block with the change, but all of the blocks that come after. This is the reason manipulation of blockchain technology is almost impossible.
  3. Nodes
    Essence of blockchain technology is decentralization and that is one of the reason it is termed as “distributed ledger”. No one organization or node can own the chain by itself. The distributed ledger is available to all the nodes connected to the chain. Nodes is a kind of electronic device that maintains copies of the blockchain and keeps the network in action.
    A system of checks-and-balances helps the blockchain maintain integrity and creates trust among users. So, due to the above properties, blockchain offers “scaleability of trust via technology”

Reference: https://builtin.com/blockchain

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