WHAT IS BLOCKCHAIN TECHNOLOGY?

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 you might know it from the notorious silk road market place where tech-savvy criminals used to purchase illegal contraband using bitcoin.

The earliest described use of it can go as far back as 1991 when some scientists developed a computationally practical solution of time-stamping digital documents like an E-notary making them very difficult to tamper or backdate. In 2008, the financial crisis proved that something is very wrong with the economic system and these wrongs have not been made right yet. 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 not only gave back the power to the people using its peer-to-peer network but also made it safe, anonymous, and tamper-proof.

Now there is a lot of confusion about what is blockchain and how it works. I have explained it all under.

Blockchain Definition:

  • A blockchain is basically 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 computer of the system.

How does a Blockchain work?

A blockchain is basically a record proving what each and every member of the blockchain owns. The records are split and made into blocks that join each other forming a chain. These chained blocks are then secured using cryptography. Cryptography is basically 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. As this ledger is so distributed, this makes it tamper-proof as any change in it will be directly noticed and marked invalid.

How a Blockchain is made?

A blockchain technically is 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 basically 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 it is. 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 changes as well. 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 why a blockchain is so secure and so tamper-proof. The first block of a chain is called the genesis block. The genesis block is the very 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 tampered been 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 entire minutes just to calculate the work and transaction and to add a new block to the chain. This makes it so even the computers can calculate the blocks in microseconds, a million block blockchain would take years to just 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 have all the information distributed 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 hook 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 go on to 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:

The first thing that you will want to do is 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 is that going to stop you as you are probably an immortal that 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 for ten minutes each to redo its proof of work mechanism. Yes, it’s a long wait but I am sure it is definitely worth it for you. 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. For this, 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 then 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.

Well moving away from it is pretty much impossible and impractical to try to tamper the blockchain. This is why blockchain is so secure and people around the world 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 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 ensuring privacy but can also help in criminal investigations.

There is a tech start-up called BurstIQ which seeks to solve this problem using blockchain. Patients and Doctors can now share sensitive medical information between themselves in a much 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 the records kept within them.

Finance:

Imagine being able to loan money without speaking to a single person. Imagine getting interest on your savings without the need to open accounts in banks and talking to people. If we look around that does not seem possible.

In reality, this is now the case thanks to DEFI or Decentralized Finance.

How it works is you open the DEFI app and deposit your government currency into it. 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 Interest on 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 basically 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 that agreement on all the participants. All this happens within the same program. There is no requirement of a human to be present in all this.

Smart contracts are tied to real-world assets. A stable coin is a coin that is backed up by a real-world currency. Smart contracts use stable coins and other real-world assets like stocks., gold, etc.

Blockchain in food supply chain:

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 to government agencies to logistics to distributors and then to retailers.


The Food Supply Chain

During this long supply chain, every participant has some critical information that the others do not have access to. 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. To incorporate blockchain in businesses so that 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 that was acquired by music giant Spotify in 2017 started using smart contracts to pay musicians higher royalties and on time.

Real estate:

A start-up called Propy uses blockchain not only to instantaneously make homeowner titles but also 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 are willing to 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 be 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. There are traditional ones like Python or C++ that have been used in a lot of 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 a lot more object-oriented, its predecessor C is more process-oriented. This makes C++ pack data and its function into ‘objects’ which 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 not only coordinate between different points but also 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 webpages. 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, the 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 the ease of use. This language is a huge and popular attempt at improving and simplifying the already 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 3 pillars of blockchain technology?

The three pillars of blockchain technology refer to the most fundamental characteristics of a blockchain. Each and every blockchain that exists must have these three fundamentals to be termed as one.


The Three Pillers of blockchain technology

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 the reason why cryptocurrencies like bitcoin have become so popular

Scalability:

A Blockchain can be viable only if it is scalable. This means that 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 and 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 who are involved in cryptocurrency. The secure infrastructure of bitcoin was what made the notorious “Silk Road” market place so 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 which 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 the passage of time. The technology and its use even after 12 years are still in its infancy. There still is a high risk of loss as this could very easily turn into a bubble that will burst to impoverish everyone that put 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.

References
  1. Why Blockchain Matters More Than You Think! - YouTube
  2. How does a blockchain work - Simply Explained - YouTube
  3. You Might Have Missed it, but Blockchain is Now Mainstream - YouT
  4. https://builtin.com/blockchain/blockchain-applications
1 Like

Nice share!

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https://breadnbeyond.com/blockchain/beyond-cryptocurrency-infographic/

Nice Share!

Here’s the complete infographic about blockchain: