Blockchain

What is a blockchain?

A block chain  is a growing list of records, called blocks, which are linked using cryptography. Blockchains which are readable by the public are widely used by cryptocurrencies. Private blockchains have been proposed for business use. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a merkle tree root hash). By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.

Database of financial transactions that is:

  • Decentralized: It isn’t stored in a single location, but on millions of nodes simultaneously
  • Distributed: It’s shared and continually reconciled on the network

Blocks

Blocks are at the core of this technology. Indeed, they’re the fixed structure where it stores all the data. And the important parts of the blocks are:

  • The header where you can find the reference number, the creation date and a link to the previous block;
  • The content where you can find the transactions, their amounts and the addresses of payer and payees.

Given the current block, you can access all the previous blocks linked together in the chain. So the database retains the complete history since the origin block.

blockchain is an append-only transaction ledger. What that means is that the ledger can be written onto with new information, but the previous information, stored in blocks, cannot be edited, adjusted or changed. This is accomplished by using cryptography to link the contents of the newly added block with each block before it, such that any change to the contents of a previous block in the chain would invalidate the data in all blocks after it.

What is a node in blockchain?

Blocks. As said, they’re on all the nodes of the network. So what’s a node? It’s a computer of the blockchain network that verifies and relays transactions.

And most nodes don’t do it for free. Indeed, there’s a reward (like bitcoins Etc) for the node solving the cryptographic problem of a block. So the nodes are actually competing to get the rewards!

A large number of computers are connected to the network, and to reduce the ability for an attacker to maliciously add transactions on the network, those adding to the blockchain must compete to solve a mathematical proof. The results are shared with all other computers on the network. The computers, or nodes, connected to this network must agree on the solution, hence the term “consensus.”

How does blockchain technology work?

This also makes the work of appending data to the ledger decentralized. That is, no single entity can take control of the information on the blockchain. Therefore, we need not trust a single entity since we rely on agreement by many entities instead. The beauty of this construct is that the transactions recorded in the chain can be publicly published and verified, such that anyone can view the contents of the blockchain and verify that events that were recorded into it actually took place.

Advantages of block chain

1. Greater transparency

2. Enhanced security

3. Improved traceability

4. Increased efficiency and speed

5. Reduced costs

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