Blockchain is a decentralized network in which there is no regulatory authority present to regulate the actions inside the network. Blockchain was designed to solve the problems of verification and validating information without a centralized authority, and to implement decentralization.
Blockchain is far more than cryptocurrencies.
Let’s take a simple example
Let’s assume that Jeff, Joel, ben and Mary are in a blockchain network.
And they have Rs.150 each in their account
Ben wants to send Mary a sum of Rs.100, when the transaction between ben and Mary is completed, a ledger is created in the block and is added to the chain. This block contains the timestamp, the transaction amount, the closing balance of Mary (250), ben (50), Joel (150), jeff (150).
Even though jeff has not even participated in the transaction he will have access to the block (which has the data) just because he is present in that blockchain network, same goes for all the existing people in the network, and this is what decentralized means.
A new block is added to the network every time a transaction processes, this new block has the data of the previous transactions and is attached to the existing chain.
Yes, but practically impossible. when a hacker tends to hack the blockchain network he would need enormous amount of computational energy to even alter one particular block, and to alter an entire blockchain network he would want to alter all the blocks in the network simultaneously. Which is practically impossible.What are the elements needed to create a blockchain system?
1) Peer to peer network
A network of computers or known as nodes which are equally privileged. It is open to anyone and everyone. It something which already have today, the internet. We need this network so that we can communicate and share information remotely throughout the world.
It is an art of secure communication in a hostile environment, this allows us to verify information and to prove authenticity of our own messages even around malicious players. We need cryptography since anyone can participate in the blockchain network, we need to make sure that our communication comes through unaltered.
3) Consensus algorithm
This typically means on how do we agree on adding new block to the blockchain network. There are many types of consensus algorithms, (Pow, Pos, Poi, Poa) As in bitcoin the consensus algorithm used is “proof of work” (Pow)
In order to someone to earn the right to add a new page into that ledger, bitcoin miners are required to solve a complex math problem which requires a huge source of computational power and consumes a lot of energy. And when one of the miners solves the math problem and displays it to the bitcoin network, they are displaying the proof for the work they did and hence the algorithm is called “proof of work”, after that that particular miner is incentivized with a number of bitcoin tokens.
It makes sure that people are in best interest to always follow the rules. Giving a reward to people who help us maintain the records and add new blocks to the network, the reward is a token or a coin (cryptocurrencies).
A public blockchain is open to everyone, its transnational and borderless and doesn’t require any 3rd party. A public blockchain is neutral, which basically means there is no “good or bad” or “legal or illegal” transaction. There is only a valid or invalid transaction. Some of the benefits of a public blockchain are that there is no single point of failure and is tamper proof, which means you can’t move a record or stop it from getting published from the network unless it doesn’t satisfy the consensus algorithm.
A private blockchain on the other hand, is limited only to authorized participants and it is governed by a handful of entities.
In another perspective, the whole idea of a blockchain is to decentralize a process through the general public and that’s exactly the opposite of a private blockchain.
Blockchain is one of the latest and most versatile technologies currently available now, it has the potential to give greater control to business in various industries. The methodology of blockchain technology satisfies the elements of security and trust in real world applications.