We hear the word "Blockchain" more often. But the fact is most of the bloggers here have no idea about blockchain and how it works. It's not their fault actually. I wasn't aware of Blockchain when I first started writing on a crypto-based social platform.
But then I realized I should learn everything about it, as I am blogging on a blog which is based on a blockchain.
What is Blockchain?
Simply blockchain is a chain of blocks that includes information. This technique was basically defined in 1991 by a group of researchers. It was first adopted by Satoshi in 2009 to create a rich look cryptocurrency which is Bitcoin. Now a blockchain is the distributed ledger that is totally accessible to everyone.
Once you input any data to the blockchain or any block it will be very difficult (almost impossible) to change it. That makes blockchain so secure.
How Does Blockchain Work?
In every block, there are 3 things - Data, Hash, Previous block Hash.
Data could be any kind of data. Data could be anything, for example - transaction of cryptocurrency or anything else. That means you can store any type of data here.
Hash is the unique identifier of data. The relation between Data and Hash is, you'll find the same hash for the same data. If you change anything in Data, Hash will change unexpectedly as well.
Now, what is the previous block hash? When you store data in a new block, "previous block hash" makes a chain or link with the previous block.
In this way, a chain of blocks is created and we named this chain as the blockchain.
Learn more - What is Blockchain? Simplest Explanation of Blockchain Technology Ever
How to Add a Block in Blockchain? (Consensus Rule)
You are probably wondering how to add a block in the blockchain? suppose some transactions happened and together those transactions created a block. Now you have to add that block to the chain.
Will you directly add that block to blockchain? The answer is NO!
To add that block in the blockchain the full network should agree that your block is accurate. But it is not possible to convince all to validate your block. So there is a rule which is called Consensus rule or Consensus algorithm which is followed by everyone in the network. In the case of Bitcoin, it is called proof of work.
Consensus algorithm is used so that people in distributed, decentralized networks around the world can act fairly and come to an agreement. The block is considered as valid if some works have done in that block. When a block needs to be added in the blockchain, all people in that network should consider that block as a valid block. And after the successful validation, that block will be added to the blockchain. Let's learn more deeply.
You already understood that Consensus is a well-known concept in the world of Blockchain technology. It's important to remember when you're speaking of decentralized blockchain technology it consists of nodes around the world that don't know each other. It's hard to know the intentions of other people. Either they will play fairly, try to ruin the system or not!
Everyone on a blockchain trying to add the next block of information to the chain. We need to make sure this block is truthful, no one changing that and no one manipulating data.
Most consensus in a public blockchain, they share the same traits which include it costs money(For computing power and electricity) to join the network. If it was free to join the network, anyone can jump on and spam the network. So you need money to join the network. The other two things that most of these consensus algorithms include are Rewards and Punishment.
Learn more - Consensus Rule of Blockchain - A Simple Explanation
What is Blockchain Wallet?
A Blockchain Wallet is a cryptocurrency-based wallet that allows users to regulate various sets of cryptocurrencies like Bitcoin, Etherium, Hive, etc. Blockchain wallet assists to exchange the funds efficiently, and transactions are secure as they are cryptographically approved. This wallet is accessible from the web and mobile devices. Moreover, the identity and privacy of the user is maintained properly here. That means Blockchain Wallet presents all the features which are essential for safe and protected exchanges or transfers of funds between several parties.
Simply, Blockchain Wallet is a common crypto wallet that allows users to manage cryptocurrencies. It is very comparable to the process of sending and receiving money through PayPal or any other gateway we are using nowadays. But now, you can use a crypto wallet instead of these types of gateway.
How Does Blockchain Wallet Work?
Before we jump on to - How Blockchain Wallet Works, let's explain the terms private and public keys at first and how are these keys linked to the blockchain wallet. Whenever you are creating a blockchain wallet you are also providing a private and public key which are associated with your wallet.
For example, in our regular day to day activity if you want to receive an email from someone you give him/her your email ID and expect an email from them.
Now, what if an unknown person can send an email through my account? I am giving my email address for receiving email. At the same time, I'm disclosing my email ID and I am assuming that someone won't be able to send an email from my account as he needs the password of my email ID to do that.
Knowing your email address will not give someone the ability to send an email from your account. You're not giving him the password of your email. You're just giving the email address.
What am I telling you this simple example or logic? Because blockchain follows a similar process using the public key and private key together.
The public key is similar to the email address of any person. You can share your public key with anyone to receive funds.
The private key is the top-secret key which is similar to your email's password. An algorithm with encrypt and decrypt code is used in a private key to make it more secured. You shouldn't disclose it to anyone and you use this key to spend or send your funds.
Now imagine, instead of sending an email, you want to transfer money to your friend. The transfer will be done through your blockchain wallet. With your blockchain wallet now you can send and receive cryptocurrencies.
Learn more - Blockchain Wallet Explained: A Beginner's Guide
This post is actually a summary of all of my Blockchain-related post. I tried to educate newbies about blockchain within a post. I hope you got some basic idea about blockchain. Leave a comment below if you have any queries.
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