What is Blockchain?
Before someone jumps into how the technology related to blockchain works, it is crucial to understand the definition of the same. Before you burn your fingers into something, you must be aware of the substance bringing the sense of burning on your fingers, isn’t it?
The same is true for blockchain technology as well. Bitcoin, for an instance, is a growing experiment that participants all over the globe are still trying to figure out the protocols of!
Speaking of blockchain technology, one can consider the same as the public ledger of the transactions related to cryptocurrency. It is nothing but decentralized and digitized ledger of the transacted currencies.
Considering the recent times and transactions related to the same, blocks are growing constantly as completed blocks which are added in the order of chronology as well as recorded in the similar format. This format is really helpful for the participants invested in the market as they can keep a track record of the transaction in digital currency without keeping the central record.
Participants get the copy of the blockchain from a node, that is a computer which is connected to a network) for participants to download the same mechanically. If we speak about the origin of this technology, quite honestly, blockchain technology was built as a method of accounting based on Bitcoin, which is known as the virtual currency. Blockchain technology is based on Distributed Ledger, which is a popular technology these days for numerous applications related to commercials. DLT, distributed Ledger technology, is popularly applied in the transactions to be verified among the digital currencies, which is not possible to realize with codes, digitize and inserting any type of document in the blockchain.
How does the Blockchain technology works?
Blockchain technology is based on three types of combinations of technology:-
- Private Key Cryptography
- Distributed Ledger Technology
- Security and record-keeping technology
Many participants consider these technologies to be fresh. But honestly it’s not the technology which is new, but the combination of the same leading to an application which is new for the participants.
Let’s understand how this technology works in the real world:
Consider that there are two people A and B who wants to transact using the internet. A and B are holding public keys as well as private keys with them. Where is blockchain technology used in this scenario?
The technology will be used to build the identity reference for both the users which will be digitally secured. The identity reference, in this case, will be developed on the combination of cryptographic keys including both public and private. A digital signature is what we get after combining public and private keys that help in securing the transaction details or one can consider the same symbol of strong ownership.
But is the digital signature enough to secure the transactions and relationships? The answer is NO! One can consider this signature as a method of authentication, but it must be secured with a transaction over the internet. This means authentication must merge with authorization and transaction that will act as means of approval while the transaction is realized.
In the technology of blockchains, the query is resolved with a technology called distributed ledger network.
A Distributed Network
A distributed network is analyzed by the validators, where they use verification using the mathematical calculation in order to witness the value of bitcoins at a single time. This activity is performed in order to reach a conclusion related to the value of the bitcoin. Blockchain technology involved a huge network of distribution to record the fall or rise in the values.
One needs to understand that the size of the distributed ledger network is a crucial factor in securing the network too. And when we talk about the size of the network in the real world, participants will be amazed to realize the empowerment of this network.
As a matter of fact, what makes the technology of bitcoin blockchain so qualitative and attractive is the size of the same. This technology includes limitless computing power. When the writing procedure is followed, bitcoin is realized to be secure by 3,500,000 TH/s. If you are not sure what that means, the fact will shock you to the core. This means that technology of bitcoin blockchain is securer than more at least 10,000 major banks around the globe.
Considering an instance of Ethereum, which is still considered in the test mode and known to be still immature in the network, holds the securing value of 12.5 TH/s which is larger than that of Google. And the best part is: this element is just two years old on the secured network.
System of Record
The major aim of the technology is to develop the interaction for the participation on the digital platform. And the same is achieved by combining the network with cryptographic keys. The process begins with the announcement. A aims on attaching its private key to the public key of B. In this case, A will announce the same decision using a particular method for B to notice. Taking an instance of Bitcoin, A will be sending the signal by sending cryptocurrency sums to B.
When A decides to announce the decision, the block of A will be broadcasted to ever node available in the network. The block of A will include:
- Digital Signature
- Relevant information
Protocol associated with Network Servicing
Now in the real world, one might think suspiciously about how one can attract the power of computing for network servicing in order to build it secure?
In order to achieve the same for public and open blockchains, the procedure includes mining. Mining can be considered as a smarter but old technique to approach with the help of basics of economics which includes the tragedies which are happening worldwide.
The technology of blockchain also includes the rewards for computing services. This means when a participant serves the power of computing processing for network servicing, one of the systems are rewarded eventually. This means that participants are not involved within social interest, but there is some sort of self-interest used in the technology of blockchain to serve the needs of the public.
Considering the instance of bitcoin, the aim of the entire procedure is to remove or abolish that one possibility which will involve the exact same bitcoin to be used in another transaction at the same time which is separate from your procedure. And this aim must be carried out in a way that it becomes difficult to detect the similar bitcoin in the network. This is the reason why bitcoin is considered as a property of gold. Is it crucial that bitcoins must be unique including the base units of the same in order to sustain value and ownership for the participant!
But how can one achieve the same, is a real deal here! In order to realize the same, the nodes are the biggest catch. Nodes which are basically allocating network aids on creating and sustaining the transaction history of each base unit of bitcoin. The same is realized using the tools of mathematics called ‘work proof’.
The procedure is conducted by voting the power of CPU which including their view on agreeing to welcome blocks which are new and rejecting those which are invalid through time. When miners are able to achieve the majority on the same, the introduction of the new block is realized in the same chain. This block is known to be time-stamped and might contain some sort of message in the same. Please note that every blockchain will act differently, which means that the time required to verify the same can be different. Each blockchain can include different amount or type in the same.
In order to understand the validity of the blockchain, the protocol associated with the same is what matters that help in creating value for the new block introduced in the chain. Please note that the verification process can be customized for different blockchains. The decision of adding any new rule or any type of incentive on the new block is decided at the time when a maximum number of nodes agrees on a decision upon the transaction verification.
But again, in order to understand the procedure well, you need to jump in the pool of networks. As a matter of fact, many individuals are initiating to this procedure. Because in order to learn swimming you need to get in the water first!
There are plenty of experiments on the run which are related to blockchain technology. But whether participants are approving the period or not, is yet to be decided. In the entire development procedure, the most common conclusion that was drawn was the understanding of the language. The procedure is still not handy for the participants as they are still struggling to understand the protocols related to each blockchain.
The blockchain technology is highly appreciated within the infrastructure of the web. But many discoveries are to be developed yet in the field technology of blockchain!