A peer-to-peer network’s entire transactions are recorded in a blockchain, which is a decentralized ledger. Participants can validate transactions using this technology without requiring a national automated clearing organization. Applications might involve paying bills, concluding business deals, casting ballots, etc.
Background:
You might have heard of Blockchain popping up in your newsfeed here and there. You might know it from the skyrocketing value of bitcoin or the shortages of computer graphics cards that went out of stock because people started mining Ethereum or from the notorious silk road marketplace where tech-savvy criminals used to purchase illegal contraband using bitcoin.
Its earliest described use can go as far back as 1991 when some scientists developed a computationally practical solution of timestamping digital documents like an E-notary, making them very difficult to tamper or backdate. In 2008, the financial crisis proved that something was very wrong with the economic system, and these wrongs have not been made right. People started to become sick of the centralized nature of wealth and banking and the inequality it represented. Shortly after that, a mysterious white paper surfaced published by a person or entity called Satoshi Nakamoto called “Bitcoin- A peer-to-peer electronic cash system.” This white paper called for the decentralization of currency and the use of bitcoin. The underlying technology behind bitcoin was Blockchain, which gave back the power to the people using its peer-to-peer network and made it safe, anonymous, and tamper-proof.
There is a lot of confusion about what Blockchain is and how it works. I have explained it all.
Blockchain Definition:
- A blockchain is a public, digital ledger of transactions among the participants of that system.
- It is a continually updating list of who owns what.
- The list is very hard to tamper and alter.
- It is a peer-to-peer network.
- It is decentralized.
- An up-to-date list of all transactions or online activity is stored on every member’s computer.
How does Blockchain work?
A blockchain is a record proving what every member of the Blockchain owns. The records are split into blocks that join each other, forming a chain. These chained blocks are then secured using cryptography. Cryptography is the security of a system by solving codes. This cryptography generates trust in the system, making it very hard to tamper with. This trust in the system is called automated trust. The list of records is known as a distributed ledger. This ledger is decentralized and available to everyone to see and verify. This ledger is so distributed, making it tamper-proof as any change in it will be directly noticed and marked invalid.
How is a blockchain made?
A blockchain is technically a chain of blocks that contain information. The Blockchain is stored on every computer of its member, so it is very difficult to change. A block in a blockchain is made up of three things.
- Data
- Hash
- Hash of the previous block
Data in a block:
The data contained in a block usually depends upon the type of Blockchain. This data may be digital timestamps or medical records. In the case of the bitcoin block, the data stored in it is the sender of the bitcoin, the receiver, and the amount that was exchanged among these individuals.
Hash in a block:
Every Human in the world has a unique fingerprint. The Hash of a block can be called the fingerprint of that block. It identifies a block. Every block has a unique hash. If data in a block is changed or tampered with, then the Hash of that block also changes. It no longer remains the same old block but a new one with a different hash.
Hash of the previous block:
This is one of the biggest reasons a blockchain is so secure and tamper-proof. The first block of a chain is called the genesis block. The genesis block is the first block that does not have any hash of the previous block, but all the subsequent blocks have it. When data in the block has been tampered with, the Hash of that block changes. When that change occurs, all the subsequent blocks having the older block hash become invalid, rendering the entire blockchain invalid. Now, as computers have become faster and faster, proving Moore’s Law, they can calculate hundreds of thousands of blocks in seconds, making the Blockchain valid again. To mitigate this, some clever precautions have been set.
How is tampering in a blockchain stopped?
To mitigate tampering in Blockchain, creative precautions have been set by the masters of these blockchains.
proof of work:
As computers these days have the raw hardware power to calculate and validate hundreds of thousands of blocks in a second, the proof of work mechanism slows it down. In the Bitcoin blockchain, when a new block is added, the proof of work mechanism slows it down to such an extent that it takes ten minutes to calculate the work and transaction and add a new block to the chain. This makes it so that even computers can calculate the blocks in microseconds; a million-block blockchain would take years to validate.
Peer-to-peer network:
A blockchain uses a peer-to-peer network instead of a centralized hackable server. Peer-to-peer allows the network to distribute all the information among the participating members. Everyone is allowed to join a blockchain. When someone joins a blockchain, a full copy of that Blockchain is sent to them. When proof of work gets completed, and a new block is added, it is sent to all the participating block members. The members, also known as nodes, verify if the block has not been tampered with. This means looking at the Hash. If it checks out, then the block is validated through consensus. Tampered blocks go on to be rejected and dismissed.
How to tamper with a blockchain?
So you heard that blockchain tampering is hard, but you are an arrogant hacker who thinks nothing will be able to break you, and you will, by ■■■■ or by crook, tamper the Blockchain. You want to become a bitcoin millionaire, but you don’t have the money to buy it, so you wear your black hat and change the Blockchain to put that sweet crypto cash in your wallet. Here’s the how-to:
Tamper with all the blocks in the chain:
You will first want to sit down and start changing the data on all the blocks on the block, one by one. Yes, it will take a few hundred years, but how will that stop you? You are probably an immortal who will stare at that screen forever just for that sweet crypto cash. Also, hundreds of thousands of blocks are added every day, but that won’t ever stop you.
Redo proof of work:
Now that you have changed every block in that Blockchain, we will have to wait ten minutes each to redo its proof of work mechanism. Yes, it’s a long wait, but I am sure it is worth it; as you wait for that to happen, why not read something on our website here? Time will go on a lot quicker.
Taking control:
Now that we have done our proof of work, there is still a huge chance that our hard work will be denied. We have to clear and create a consensus among this pesky democratic Blockchain. You have to take control of more than 50% of the peer-to-peer network. For this, you need the actual computers of more than half of the people on this Blockchain. Yes, it will take more Army power than the U.S possesses and a lot more money than what you will manage to loot at the end of the day, but what’s logic against arrogance? When you do so, you create consensus, and that sweet crypto money is yours. Enjoy paying your debts.
Moving away from it is impossible and impractical to try to tamper with the Blockchain. This is why Blockchain is so secure, and people worldwide have started to use it mainstream.
Applications of Blockchain:
Making things easier is the hallmark of every game-changer. Blockchain going mainstream can make life a lot easier for us. Here are some mainstream applications of Blockchain.
Medical Records:
Medical records can be stored on a blockchain, making them hard to tamper with. This can help in not only securing them and ensuring privacy but can also help in criminal investigations. Medical records can be stored on a blockchain, making them hard to tamper with. This can help in not only securing them and ensuring privacy but can also help in criminal investigations.
A tech start-up called BurstIQ seeks to solve this problem using Blockchain. Patients and Doctors can now share sensitive medical information between themselves in a much more secure manner helping the patients not only to secure their privacy but also to help doctors to come up with personalized health care plans for their patients.
E-Notary:
The original and intended purpose of Blockchain was the E-notary. When records are kept within a blockchain, they are digitally timestamped, making them very difficult or impossible to alter. This brings not only trust in the system but also in the records kept within them.
Finance:
Imagine being able to loan money without speaking to a single person. Imagine getting Interested in your savings without needing to open bank accounts and talking to people. If we look around, that does not seem possible.
This is now the case, thanks to DEFI or Decentralized Finance.
It works when you open the DEFI app and deposit your government currency. With that money, you buy any cryptocurrency of your choosing.
So when you want a loan, that Cryptocurrency can be used as collateral to loan against.
You also get Interested in that Cryptocurrency. The less volatile that currency is, the higher the Interest.
All this without speaking to a single person in a bank or anywhere.
Smart contracts:
How the DEFI app manages to do all this is thanks to smart contracts. The DEFI app is built upon Ethereum. Ethereum uses smart contracts.
Smart contracts are digital contracts made of code. The purpose of this smart contract is to replace the intermediary between the two parties. This code in smart contracts writes the term of agreements and enforces those agreements on all the participants. All this happens within the same program. There is no requirement for a human to be present in all this.
Smart contracts are tied to real-world assets. A stablecoin is a coin that is backed up by a real-world currency. Smart contracts use stablecoins and other real-world assets like stocks., gold, etc.
Blockchain in the food supply chain:
A very new and interesting use of Blockchain has been discovered in the food supply chain. Now a day, food moves through a whole chain before landing at our tables. The supply chain starts from the farm to the manufacturers, to the certifying agencies, government agencies, logistics, distributors, and retailers.
During this long supply chain, every participant has some critical information that the others do not access. All of them have to take each other just for their word hence the chances of fraud increase ten folds. If anyone of them is cheated in this entire supply chain, then everyone is cheated. To keep a check on this, companies like nestle and oregano corporations have started using Blockchain, where all the information is merged, and data entered once cannot be tampered with again.
Paying wages:
Business nowadays in the time of the internet have gone international. Even a small corner shop can have clients and employees living thousands of miles away. Incorporating Blockchain in businesses so they can use Cryptocurrency to compensate their workforce has proven to be a huge cost saver for companies.
Music Industry:
A tech start-up called Mediachain was acquired by music giant Spotify in 2017 and started using smart contracts to pay musicians higher royalties and on time.
Real estate:
A start-up called Propy uses Blockchain to make homeowner titles instantaneously and lists properties available to purchase using Cryptocurrency.
How do I withdraw money from Blockchain?
Withdrawing money from a blockchain can be very easy if you can identify yourself by linking your bank account. The point of Cryptocurrency is to use that indefinitely and do transactions using them. But even in 2020, Cryptocurrency is still not accepted everywhere; hence we have to withdraw them.
Here are a few ways listed to sell your Cryptocurrency.
- The crypto can be sold to someone who wants to buy it, like an item trade. In time they will send you the currency, but it is also risky as if you give them the crypto before getting your fiat currency, they can easily run away as there are no safeguards in place for that, and you will have to work on mutual trust.
- Use a reputed currency exchange like coinbase or bitstamp that would buy your Cryptocurrency and deposit your money through the bank. This will leave you open to being identified as you go from a decentralized economy to a centralized one.
- You can also use bitcoin ATMs if they are located in your country. They will accept your bitcoin and churn out cold cash for you to spend
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What are the best programming languages for Blockchain?
There are a lot of programming languages that are used in the creation of technological applications for Blockchain. Traditional ones like Python or C++ have been used in many applications, while some are new and specific to blockchains like Simplicity or Solidity. Let’s explore some of them.
C++ :
This language was an extension of the old C programming language. While C++ is more object-oriented, its predecessor, C, is more process-oriented. This makes C++ pack data and its function into ‘objects’ that can be called into and unpacked in other programs easily.
This language allows effective management of resources and offers greater control over memory. Blockchain requires users and miners to interact with each other both systematically and simultaneously. C++ creates applications that coordinate between different points and process their work quickly. This is why the blockchain projects like bitcoin, ripple, etc., are written in C++.
JAVA:
Java has always been very important for the internet. Some would say it is one of the most important building blocks of the internet. Java is used to create highly interactive web pages. It is also now making blockchains that are impossible to change after they have been hashed and verified. Once a block has been created with the address of the previous block, a new block being added to it becomes impossible to create.
PYTHON:
A brainchild of a Dutch programmer in 1991, Python was created to be a clutter-free, minimalistic, and simple programming language.
The syntax and logic of this programming language used in Blockchain fully reflect the ambition of the creator of this language; hence it is a top language used for Blockchain, web, and software development.
SIMPLICITY:
Now we move on to the languages created specifically for blockchain development. This language is used and was specifically designed for drawing up smart contracts. The creator of this language stands by its ease of use. This language is a huge and popular attempt to improve and simplify the existing “Bitcoin script” and Ethereum Virtual machine. The creator of this language, Russel O’ Conner, hopes that his language will be a part of bitcoin once it is given a proper chance and evaluation of its many features.
What are the three pillars of blockchain technology?
The three pillars of blockchain technology refer to the most fundamental characteristics of a blockchain. Every Blockchain must have these three fundamentals to be termed as one.
Decentralization:
Decentralization means that it does not have to conform to any government authority. They must be anonymous and out of the control of any authority. This was the main appeal and why cryptocurrencies like bitcoin have become so popular.
Scalability:
A Blockchain can be viable only if it is scalable. This means it can have its size and capacity while maintaining smooth operations. This can be achieved by eliminating slower process times, bloat, and lag. As Bitcoin grew more popular, its scalability was also adequate as more and more people used mining equipment to figuratively shoulder this massive infrastructure.
Security:
Security is mainly the biggest concern of the people involved in Cryptocurrency. The secure Bitcoin infrastructure made the notorious “Silk Road” marketplace rich and successful. If cryptocurrency platforms are not secure, their entire appeal is gone. Crypto wallets are one way to ensure security, as they have a digital address that can be used for some online services like steam.
Conclusion:
Even though the prospects of Blockchain, Cryptocurrency are looking very good and things might be looking on the bright side as new and new uses of these are being discovered with time. The technology and its use, even after 12 years, are still in their infancy. There still is a high risk of loss as this could easily turn into a bubble that will burst to impoverish everyone that puts all their eggs in its basket. Blockchain one day might be the only place where we will keep all our records and money, but as of now, we must tread lightly.