A Beginner's Guide to Blockchain: Understanding the Basics

Greetings Everyone! This blog aims to provide a basic understanding of Blockchain technology. Regardless of how familiar you are with the subject, you can be sure to obtain a general understanding of the concept by the end.

Having said that, let's move on to today's topic, "Blockchain". In simpler terms, A blockchain is a digital ledger system that records and stores transactions in a secure and immutable way. This system is managed by a network of computers, with each block containing a list of verified transactions. Once a block is added to the chain, it cannot be changed, thus creating an unalterable record of all previous transactions.

Distributed Ledger Technology (DLT) is a type of database that is distributed across a network of computers, allowing various parties to securely record and verify transactions without relying on a central authority. DLT encompasses various systems, such as Blockchain, Hashgraph, and Tangle.

The Block in the Blockchain:

Blockchains are a form of distributed ledger technology that is comprised of a series of cryptographically-linked blocks, each of which stores a collection of transaction data. The data contained in these blocks are organized into a Merkle tree structure, which ensures the efficient verification of transaction details. Additionally, each block contains a cryptographic hash of the preceding block, which enables them to be linked and form a secure chain.

The process of creating a new block and adding it to the blockchain is known as mining. During this process, miners compete to solve a complex computational problem that, once solved, allows them to create the block and be rewarded in the form of cryptocurrency.

The blocks on a blockchain are securely connected using cryptographic techniques, making it challenging to retroactively alter the stored data. This helps to ensure the data's integrity and security.

Picture Credit: RubyGarage

What’s a Hash?

The cryptographic hash of a block within a blockchain is a unique value that is determined algorithmically according to the data contained in the block. This hash function is irreversibly calculated, meaning that it is effortless to generate the hash of a block, yet considerably challenging to discern the data from the block based on its hash.

The hash of a block is a fundamental component in the blockchain, providing several important advantages:

• It serves as a unique identifier for a block, allowing for easy distinction among all the blocks.

• It also ensures the integrity of the block's data by changing the hash if any alterations are made. This makes it easy to detect if anybody tries to mess with the blocks in the blockchain.

• It connects the blocks into a chain, with the hash of each block incorporating the hash of the previous block.

• This connection is further strengthened by the cryptographic properties of the hash function, making it difficult to tamper with the data in a block undetected.

What is a Hash function?

A hash function is a mathematical operation employed within the context of blockchains that maps data of any size to a fixed-size output. This operation, conducted on an input known as the "message," yields an output known as the "hash" of a predetermined length which is unique to the input data.

Hash functions play an essential role in numerous cryptographic operations, including being integrated into blockchains. In the context of a blockchain, the hash function is utilized to generate a singular hash for every block of transactions. Each block's hash acts as a distinguishing marker for that specific block and is used to connect it to its antecedent block in the blockchain.

The nature of hash functions is such that ascertaining the input data from its hash is computationally infeasible; thus, malicious actors are unable to tamper with data within a block without detection.

A hash function is considered strong if it is collision-resistant, meaning that it is improbable for two different inputs to produce the same hash. This is necessary for ensuring that each block in the blockchain has a unique hash, which is important for the blockchain's security and reliability.

Several hash functions have been implemented within various blockchains, such as the SHA-256 algorithm used in the Bitcoin blockchain, and the Ethash algorithm utilized by the Ethereum blockchain.

Hash algorithms are commonly used to identify changes to data in blockchain blocks. To further ensure the security of the blockchain and mitigate attempts to alter data, blockchain technology also incorporates a process known as proof-of-work.

Proof of Work:

Proof of Work is a distributed consensus mechanism utilized to verify transactions and append new blocks to a blockchain. This mechanism is widely utilized by cryptocurrencies, such as Bitcoin and Ethereum. The miners in a Proof of Work system compete to solve a computationally complex problem. The successful miner is rewarded for solving the problem and for creating a new block in the blockchain.

The computational problem is designed to be difficult to solve but simple to verify. This stipulation necessitates a significant amount of work to be done by the miners in order to generate a new block, but it also allows the network to verify the solution easily and accurately.

The blockchain network consists of a network of computers that are incentivized to solve a complex cryptographic problem in order to have the privilege to add the next block to the chain. These mathematical problems are crafted in such a way that they are difficult to solve but easy to verify, which helps to prevent any malicious intent.

Types of Blockchain:

Blockchains come in various forms, including public, private, consortium, hybrid and sidechain networks.

• Public blockchains: These are open and decentralized networks that anyone can participate in, like the Bitcoin and Ethereum blockchains.

• Private blockchains: These are permissioned networks that are restricted to certain participants. They are often used for enterprise scenarios and may provide additional privacy and control.

• Consortium blockchains: These are hybrid networks that are partially decentralized and partially permissioned, and are used in cases where multiple organizations need to collaborate on a shared database without completely surrendering control.

• Hybrid blockchains: These type of blockchain combine aspects of both public and private blockchains, allowing them to benefit from the security of public blockchains and the privacy of private blockchains.

• Sidechains: These are blockchains that are linked to a main blockchain, allowing for certain tasks or transactions to be handled outside of the main chain.

Conclusion

I hope the article would have helped you to understand the basics of Blockchain. Feel free to drop in any questions or feedbacks as this is my first blog post. We’ll meet in the next blog, till then Have a great day everyone.