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The Simplified Guide To Blockchain Technology

by janeausten
Blockchain

Blockchain is a ground-breaking piece of technology. Potent enough to disrupt existing global economic mechanisms, blockchain technology revolves around mathematical encryption and decentralization. This technology’s immense potency, rising popularity, and disruptive nature have made it a central research subject and led to widespread implementations across multiple industries. There are numerous courses and programs on blockchain provided by top universities worldwide, and leading online MOOCs & pay someone to do my assignment uk services offer quintessential academic assistance to students of the subject. 

Interested in learning more about blockchain? Then this article is what you have looking for as it offers a concise overview of blockchain technology. 

Let’s get started. 

The Rise of Blockchain

Blockchain first came into the picture in 2008 with the introduction of Bitcoin in a white paper by Satoshi Okamoto. No one knows who this person is or if the name is a pseudonym for a person or a group. 

The central motivation behind cryptocurrencies was wresting control from financial institutions that played a mediating role in e-commerce. The concepts powering blockchain were capable and advanced enough to disrupt this system, impacting the entire global socio-economic fabric. 

Satoshi Okamoto’s white paper planted the seed of an idea. Since then, crypto & blockchain have flourished through copious research & studies conducted by prominent business, academic, governmental, & non-governmental organizations around the world.  

  • Up until 2013, the primary usage of blockchain was in cryptocurrency and digital financial transactions. 
  • A greater revolution began in 2013 with ideas & concepts that investigated the potential applications of blockchain in other sectors. Further research, maturity & standardization and widespread adaptation began, and 2018 saw multiple real-world implementations. 
  • Today, numerous organizations are conducting active research and looking to integrate &, in some cases, outright replace legacy systems with blockchain. And it is not just financial mechanisms but several business-critical systems such as data warehouses, supply chain management platforms, information security systems, and much more.  

So, what makes blockchain technology so unique? Why did development and implementations accelerate at such a rapid pace in such a short span? 

The technology’s unique features brought fantastic benefits and revolutionized global economic machinery. The following section offers a concise look at those features and benefits by elucidating how blockchain works. 

How Does It All Work?

The basis of blockchain-based systems revolves around certain key concepts. To understand how blockchain works, we need to know how these concepts make up the blockchain. 

Bitcoin was THE first use case of blockchain so let’s use it as a tool to dissect the technology & look at its intricacies. 

The Cryptocurrency Perspective

Cryptocurrencies such as Bitcoin, Ethereum, Tether, Binance, etc., are a type of electronic payment system. What makes them unique is that no central authority is acting as a mediator to validate transactions. Cryptographic proof, instead of trust in a third party, validates every financial transaction and brings forth numerous benefits such as:

  • Decentralization
  • Reduction in transaction charges
  • Near-zero chances of any fraudulency 
  • Improved security 
  • Easy traceability of all valid transactions 
  • A wholly secure and automated system 

So, how does blockchain offer such benefits? Blockchain uses a timestamp server to identify every Bitcoin’s entire history of transactions accurately.  

Timestamping 

Timestamp servers work by taking the hash of each block to be timestamped and then broadcasting the hashing value to an entire network of Bitcoin miners. Every block can store up to 2000 transactions in the case of Bitcoin. This value changes among different cryptocurrencies. 

The timestamp acts as proof of the validity of a particular transaction. And every timestamp contains information about previous transactions due to the hashing involved. The timestamp of every block reinforces all previous blocks and the financial transactions conducted. 

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The Proof of Work/Consensus Mechanisms 

The next crucial concept in Bitcoin/blockchain technology is proof of work that uses cryptographic proof to ensure all transactions in a block are valid. The proof of work is closely associated with creating blocks in a blockchain and including transactions in a block.

  • Nodes are those elements in a blockchain network that begins a transaction. Transactions are data structures that contain all vital information about the actions in the blockchain network at a particular period. 
  • Transactions are flooded to all the peers/nodes in a blockchain network for multi-peer verification and subsequent addition to a block.
  • Validation of transactions and inclusion of blocks in the blockchain are two of the most critical aspects of all blockchain-based systems. There are no mediating verifying authorities involved. This is where consensus mechanisms come into play and purport blockchain technology’s decentralized nature.
  • Every transaction in a blockchain network is flooded across the entire network. Blockchain miners take a bunch of transactions, validate them, and then add them to a block. 
  • Remember that all blocks in a chain are cryptographically linked with one another through the timestamp server’s hashing. The hash of a previous block plays a critical role in determining whether a new block is to be added to the blockchain. 

NOTE that transaction validation is NOT THE SAME as block validation. When a block is validated and added to the blockchain, it gets its first validation, and the transaction reaches its second validation.

Consensus mechanisms such as the proof of work concept play a central role in transaction and block validations. 

Okamoto’s proof of work concept is one of the earliest consensus mechanisms for block validation and goes something like this 🡪 

  • A nonce (number used only once) is used to calculate the hash of a block that meets specific criteria, which in the case of Bitcoin, involves adding a certain number of starting zeroes to a block hash.
  • Blockchain miners expend processing power to determine the correct nonce for a block hash. The CPU power spent for finding a valid nonce is the proof of work of a block.
  • Batches of valid transactions flooded across the network are accumulated by nodes/validators. 
  • Miners expend computation power to find an expensive and complex proof-of-work for a new block. This PoW includes the hashing information of the previous valid block. 
  • When a proper PoW is found for a block, it is transmitted to all nodes in the network. Nodes arrive at a consensus about a block only if all the transactions in the block are valid. 
  • The hash of the newly accepted block now becomes the hash to be used for the validation of the new block. 

As you may already guess, blockchain technology is a distributed peer-to-peer network. Proof of work involves 

Author Bio:

Anne Gill has worked for MyAssignmenthelp.co.uk for the last seven years and specializes in providing excellent online exam help to college and university students. 

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