Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), makes the history of any digital asset immutable and transparent by using a decentralized network and cryptographic hash.
A simple comparison of how blockchain technology works and how Google Docs works can be used. When you create a Google document and share it with people, it is only shared and not copied or transmitted.
This creates a decentralized distribution chain that allows everyone to access the original document at the same time. No one is stuck waiting for other edits, as all changes in the document are entered immediately, making changes completely.
One important weakness to note is that, unlike Google Docs, the original content and blockchain data cannot be changed once it is written, which adds to its level of security. Of course, the blockchain is more complex than a Google Doc, but the comparison is important because it shows a very important understanding of the technology:
BLOCKCHAIN OUT: BLOCKCHAIN BOOK
- Blockchain is a digital ledger or database where the encrypted value of digital asset data is stored and linked, creating a single source of truth for that data.
- Digital assets are distributed, not copied or transmitted.
- Digital assets are decentralized, allowing for real-time access, transparency and governance across multiple platforms.
- Blockchain's record is transparent - all changes made are recorded, maintaining integrity and trust.
- Blockchain records are public and use existing security measures, making it the technology of choice for almost any company.
Why is blockchain important?
Blockchain is a promising and transformative technology because it can reduce security risks, eliminate fraud and bring transparency in a scalable way. Popularized by its association with cryptocurrency and NFT, blockchain technology has evolved into a management solution for all types of global companies.
Today, you can find blockchain technology delivering insights to food supply chains, storing health data, innovation in gaming, and changing the way we deal with data and power at scale.
How does blockchain work?
For proof-of-work blockchains, this technology has three important concepts: blocks, nodes, and miners.
What is a block?
Each chain consists of several blocks and each block has three main elements:
- Block data. The nonce - "number used only once".
- A nonce in the blockchain is a random integer generated when the block is created, which generates the hash header.
- The hash - a hash in the blockchain is a permanent number without. For Bitcoin hashes, these values will start with a large number of zeros (ie, very small).
When the first block in the chain is created, a cryptographic hash is created. The data in the block is considered to be signed forever and has no meaning in the hash unless extracted.
What is a Blockchain Miner?
Miners create new blocks on the chain through a process called mining. In the blockchain, each block has nothing in it and the hash, but refers to the hash of the previous block in the chain, so it is not easy to install a block, especially in a large chain.
Miners use special software to solve the complex mathematical problem of finding an acceptable hash. Since the non-only hash is 32 bits long and the hash is 256, there are about four billion possible non-hash combinations that must be generated before the correct one is found. When this happens, miners are said to find a "golden nonce" and add their block to the chain.
Making a change to any previous block in the chain retries not only the block in that change, but everything that follows it. This is why it is very difficult to manage blockchain technology. Think of it as "math saving" because finding the absence of gold takes a lot of time and computing power.
When a block is successfully mined, the exchange is accepted by all the numbers in the network and the miner is paid a fee.
What is decentralization and blockchain?
One of the most important concepts of blockchain technology is decentralization. No computer or organization can own that channel. Rather, it is a directory distributed by nodes connected to the chain. A blockchain node can be any kind of electronic device that keeps a copy of the chain and keeps the network running.
Each node has its own copy of the blockchain, and the network must have an algorithm that supports each newly mined block for updating, validation and verification. Because blockchains are transparent, everything that is done in the ledger can be easily verified and checked, creating blockchain security.
Each participant receives a unique alphanumeric identifier that identifies their transaction. The combination of public information and a system of checks and balances helps blockchain maintain integrity and build trust between users. Basically, blockchains can be thought of as the scalability of trust through technology.
TAKEAWAYS- HOW THE BLOCKCHAIN WORKS
Blockchain is a digital database, made up of encrypted data blocks that are "chained" and secured by complex mathematical problems.
Mathematical problems related to the compatibility of nonces and hashes are almost impossible to change later - the record of past actions in the blockchain is accurate and cannot be changed.
The blockchain is distributed equally across multiple decentralized nodes, ensuring that no single organization can own or manipulate it.