Originally introduced in 1991 by a group of researchers, Blockchain Technology was initially intended to timestamp digital documents so that it’s not possible to backdate them or to tamper with them. Almost like a notary! But what is the blockchain technology that seems to be quite popular nowadays? How do they work? What problems do they solve and how can they be used? As the name suggests, a blockchain is a chain of blocks that contain some data. However useful it could have been, this method wasn’t put to much use; until it was applied to create a digital cryptocurrency ‘Bitcoin’ by “Satoshi Nakamoto” in 2009.
A blockchain can be described as a “distributed ledger that is completely open to anyone” with an interesting property- once some information has been recorded in a blockchain, it gets very difficult to change it.
To understand how it all works, let’s take a closer look. Each block contains 3 components- data, a hash of the block, and a hash from the previous block. The data that is stored inside a block depends on the type of blockchain. The Bitcoin blockchain, for example, would store details about a transaction here, such as the sender, receiver, and the number of coins.
The second component is a hash, which is somewhat of a fingerprint for a block. It identifies a block and all of its contents and it’s always unique, just as a fingerprint. Once a block is created, its hash is being calculated. Changing something inside the block will cause the hash to change. So in another word, hashes are very useful when you want to detect changes to blocks. If the fingerprint of a block changes, it no longer is the same block.
The third component of the block is the hash of its previous block, hence, effectively creating a “chain of blocks” and it’s this technique that makes a blockchain so secure.
Let’s say, we have a chain of 3 blocks- each block has a hash and a hash of the previous block. So, Block-3 points to Block-2 and Block-2 points to Block-1. Now the first block can’t point to any previous block. It’s called the genesis block. Now, if someone tampers with Block-2, it causes the hash of the block to change as well. In turn, that will make Block-3 and all following blocks invalid because they no longer store a valid hash of the previous block.
But the computers these days are super-fast and hence capable of easily calculating hundreds of thousands of hashes per second. One could effectively tamper with a block and recalculate all the hashes of the other blocks to make a blockchain valid again. So, to prevent this, blockchains have a mechanism called a ‘proof-of-work which basically slows down the creation of new blocks. For example, in Bitcoins case: it takes about 10 minutes to calculate the required proof-of-work and add a new block to the chain. This mechanism makes it very hard to tamper with the blocks as tampering with even one block will require the miscreant to recalculate the proof-of-work for all the following blocks. So the creative use of hashing and the proof-of-work-mechanism make the security of blockchains pretty tight.
Additionally, blockchains secure themselves by being distributed. Blockchains use a P2P (peer-to-peer)network and joining is allowed for everyone. When someone joins this network, they get a full copy of the blockchain. The node can use this to verify that everything is still in order. Now when someone creates a new block, that block is sent to everyone on the network. Each node then verifies the block to make sure that it hasn’t been tampered with. If everything checks out, each node adds this block to its own blockchain. All the nodes in this network consensus. They agree about what blocks are valid and which aren’t. Blocks that are tampered with will be rejected by other nodes in the network. So, to successfully tamper with a blockchain, you need to tamper with all the blocks on the chain, redo the proof of work for each block and take control of more than 50% of the P2P network. Only then will your tampered block be accepted by everyone else, which is almost impossible to do!
The utilization of blockchain technology peaked a lot of interest amongst people as they realized that this tech can be used for so many other things like storing medical records, creating a digital notary, or even collecting taxes. So, now you know what a blockchain is, how it works on a basic level and what problems it solves.
If you wish to learn more about Blockchain Technology and build a career in it, then check out different blockchain certification training programs that come with live instructor-led training and real-life project experience.
Hope you have got a clear idea about Blockchain Technology. For more information, feel free to contact Cleonix Technologies- the best web development company in Kolkata providing high-end website designs and scaleable digital marketing campaigns to begin your new business or expand the existing one.