Blockchain

  Cryptographic Algorithms: Blockchains are secured with strong state-of-the-art cryptographic mechanisms. Everything stored on the Blockchain is encrypted.  To give you a better idea of how it is used in Blockchain, let’s get back to our previously discussed example where Kevin transfers 5 BTC to James. This transaction goes into the network in the form of an encrypted message. This message is unique is for every transaction. Now, you would ask what makes the message unique? It is because the transaction is signed by the senders unique key called a private key, hence the digital signature. The mechanism looks something like this: Miners verify this digital signature for validating a transaction in the network. Cool.Isn’t it? Let me tell you some more fascinating stuff. Ever seen these numbers before: 09bed8e02e49277378f256c9d93ba4e408771088483f3955c6b1186ac8c7630a. Looks gibberish right? Well, it’s called Secure Hashing Algorithm (SHA-256). The function is so powerful that if you pas

  Public: Public blockchains have ledgers visible to everyone on the internet and anyone can verify and add a block of transactions to the blockchain.        Examples – Bitcoin, Ethereum, Dash, Factom Private: all permissions are kept centralized to an organization. Private blockchains allow only specific people in the organization to verify and add transaction blocks but everyone on the internet is generally allowed to view.        Examples- Multichain, Blockstack Consortium: controlled by a consortium of members. Only predefined set of nodes have access to write the data or block.       Examples- Ripple ,R3 & Hyperledger1.0

Consider a Bitcoin transaction where, James transfer 5 BTC his friend, Kevin in the network.  Now, this transaction is broadcast to the Bitcoin Blockchain network, and the special nodes called Miners who takes up this transaction from the pool of unconfirmed transactions, validate it and adds it to their block. Here, suppose Lisa and Robert are miners, they verify the transactions in the network and groups the verified transaction in a block and start competing to solving a complex mathematical puzzle called Proof-of-work. If Lisa here solves the puzzle first, she broadcast the block to the entire network. The other miners validate the block and every node unanimously agrees to the current state of the ledger, each updating the record independently. Thus James and Kevin get a verification message that the transaction is completed. The transaction thus becomes a part of the universal distributed ledger (or Blockchain). And, For her computational work, Lisa is rewarded with newly created

Blockchain is a backlinked, decentralized and distributed-database of encrypted records. Okay, if those words seem bemusing, then let me break it down for you: It’s a data structure where each block is linked to another block in a time-stamped chronological order It’s an append-only transactional database, not a replacement to the conventional databases Every node keeps a copy of all the transactions happened in the past which are secured cryptographically All information once stored on the ledger is verifiable and auditable but not editable Highly fault tolerant as there is no Single-point-of-failure. As blockchain didn’t conceptualize as a single separate entity in itself, it was the backbone technology of bitcoin, so we shall try to understand it with the use case of bitcoin & how does it help securely transfer this “digital gold”.