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Blockchain technology is a hugely important, transformative, game changing technology that will re-shape businesses
The above is what you see almost everywhere on the internet when you type the world blockchain on any search engine, but it will interest you that as transformative, innovative, important and game changing of the technology not many really have a sound knowledge or understanding of how it works. This article seeks to be a bridge between blockchain illiteracy and literacy.
A sound foundation in understanding the basics of blockchain will give the reader a full grasp of the technology and the numerous opportunities for inventions it promises.
Blockchain technology is a distributed ledger technology which means it's a special type of database where the data, information and records on the database system are spread sequentially accross the network or multiple sites.
The blockchain can also be simply defined as a consensus, digital, distributed, decentralised public ledger. Taking it further so you could grasp it properly, a ledger is simply a record book where transaction entries either credit or debit are tabulated.
This will lead us to conclude that
The blockchain is a giant spreadsheet of transactions with the extra feature of being digital, consensual, distributed and decentralised.
Bitcoin which is considered the mother of all cryptocurrency is a product of blockchain technology utilising the tech as it basic structure on which it operates. This explains to us that cryptocurrencies are only possible because of blockchain technology. Consider blockchain as the engine that runs the cryptocurrency network.
Blockchain from the word in itself tells alot on its meaning, taking the two words apart to create separate words we have block and chain which would be a guide to understanding how the technology works.
- "Blocks" in a structural context tells us how the digital information are aggregated and what are collected e.g data, digital information.
- "Chain" tells us how the various blocks which are the digital information are linked together and stored in the database.
Reverse engineering the word "Blockchain" to become "chain of blocks" tells the full story of how the technology distinguishes itself from conventional database system.
Blocks: The block in the blockchain are an integral part of the tech as it contains relevant information such as
- Transactions, memo, data, digital information of the transactions like the timestamp, date and signature of the transactions.
- Information of the network participants taking cognisance of the decentralise distributed nature of blockchain and,
- Hash of which is the unique distinguishing information of each blocks.
Note: Every blockchain has a particular size limit for each of their blocks and as such only a finite amount of information would exist in a block.
Chains: This just refers to the steady continual increase in records of the blocks using their hashes to create a unique database.
With the above properly stated, one must then understand Hash and how integral their connection is in the blockchain technology.
Hashes are cryptographic codes created by special algorithmic protocols, hash are the unique block fingerprints or signature created by mathematical equations from the set of inputs into each block. They are unique to each block and thus can be seen as a block identifier or identity and they link one block to another to ensure the security and authenticity of the chain.
The blockchain as it name implies is series of blocks chained together by their hashes.
In more details, here is a detailed scheme of operation that occurs in a basic blockchain network
- Transaction must occurs: Mr A initiates a transaction to pay a certain amount of currency to Mr B and he chooses the amount and makes payment to Mr B from his account.
- Transaction must be verified: The transaction initiated by Mr A is seen on the server by his bank who must verify that he has that particular amount he is trying to send to Mr B and if it's found that he has such they process the transaction and send to Mr B, although in the case of blockchain since no centralize organization is in charge of the ledger, the network computers or participants does the verification and upon fulfilling basic tenets of the transaction, it is verified and approved by majority of the network computers and the transaction is processed.
- Transaction must be added to a block: The transaction fulfilling basic tenets simply means that the digital information for that transaction is proven to be authentic and no foul play was discovered by the network, if all that has been sorted out, the transaction is approved and is added to a block with all of its information. The block depending on it's limit size will recieve a lot of transaction until it gets full and can no longer take more transactions which will be added to the next block.
- The block must be given a hash: Upon receiving all the transactions to be in a block, the block must be given a hash, it is note worthy that the hash of the previous block must be included in the new block, with all the new set of inputs into the block, the block using it's assigned hashing algorithm creates a unique hash(alphanumeric strings) that identifies the newly created block. Every block in the blockchain contains the hash of the previous block and its own newly created hash, except the genesis block of any blockchain which doesn't have a preceding block before it. Once the block has been successfully hashed the block is added to the Blockchain and it's visible to everyone in the network.
"In appreciating the present and forecasting the future one must truly understand the past" these words a sage once told me.
A simple understanding of blockchain technology will give you the insight of the simple goal to wit it was created which is to allow digital information to be securely recorded and distributed, but not edited thus rendering it tamper proof.
Blockchain technology was first outlined by Stuart Haber and W. Scott Stornetta in 1991 in an academic paper where their work focused on timestamping documents, a popular use case for blockchain technology, even today. By storing hash values in a timestamped block on the blockchain, one can prove that a document existed at a certain time in a certain version.
Although this is not the acclaimed implementation of blockchain, in 1994 we see yet another individual make a valuable contribution to the Blockchain word, in 1994 Nick Szabo a renowned Cryptographer and Computer Scientists known for his pioneering work in Smart contracts as well as the designing of BitGold in the 90s which many acclaimed to have influenced the creation of Bitcoin in 2008.
Fun Facts There are many who still think Nick Szabo as the Pseudonymous creator of Bitcoin Satoshi Nakamoto 😁😁😁, how true that is, I can't say. Not until 2008 did the Bitcoin white paper was released by Satoshi Nakamoto the Pseudonymous Creator and in Jan 2009 was the genesis block of Bitcoin mined and the network went live, did we see an actual use case of blockchain technology, and ever since then, we have seen blockchain technology metamorphosed into varying arms of sector aside the financial of which it was originally created for as an electronic digital peer to peer cash system.
Going forward we see blockchain technology been used in almost all facets of life, creating innovative solutions to problems that have existed since mankind, no wonder it is called the revolutionary technology.
We can now bodly say that what the internet did for information, blockchain is doing it for money and also the internet itself.
Features of Blockchain
Blockchain is more than just a database or a giant spreadsheet of transactions, it is special, and there exist those special features that gives it is speciality, and some of them include:-
- Decentralisation: Unlike the conventional database system where there is a central authority with special access to the servers where the information/records are been stored, blockchain is not decentralised with its codes often open source and anyone can participate in the network and have access to the information they so desire.
- Distributed: Blockchain is distributed as the ledger is shared accross the network in multiple copies. Everyone participating in the network at a particular time have the exact copy of the ledger irrespective of location and time difference.
- Architecture: Blockchain Technology is not built on a client/server type of architecture but on a distributed network ledger network where every participating computer becomes a node for data storage and processing.
- Transparency: In a world where a push for accountability is on the rise, the blockchain technology offers transparency at its best through its basic mode of operation, anyone with the right tool(hardware/software) can view and verify the data written in the blockchain.
- Immutability: Immutability is a strong suit for the blockchain world using cryptographic hash codes attach to blocks in sequence of chains makes tampering with already verified blocks extremely difficult and considering the distributed nature of the chain one will have to hack all the different nodes at the same time or gain majority of the nodes at the same time in a phenomenon called 51% attack to be able to tamper with records on the blockchain.
That been said, data once stored on the blockchain 99% cannot be erased, replaced or modified. - Consensus driven: The process used by the groups of peers in maintaining the ledger network. Blockchain does not have a central authority and as such the governance model is based on different consensus algorithm by which changes and operations will be carried out on the ledger or network.
Blockchain is revolutionising the entire digital world and you might just be right to call it the new internet, the decentralised internet, the internet for the people and by the people.
Blockchain technology finds numerous real life application in a wide range of life some of which I will list and in subsequent articles explain them in full, they include:-
- Money and payments
- Finance
- Defi
- Social media
- Social impact
- Real estate
- Energy and sustainability
- Supply chain management
- Government and public sector
- Healthcare
- Media and entertainment
- Capital markets
- Sports
- Gaming
- Digital identity
- Smart contracts
- Academics & Certification.
There is a whole new world out there in blockchain technology and you can plug into it.
References
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