Blockchain the main core of cryptocurrencies

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blockchain

What is the Blockchain technology and how can we use it in the new shape of internet

Blockchain is not just a technology that cryptocurrencies as Bitcoins and Litecoins are using. But it is the main method that currencies use in crypto trading.
Currencies like bitcoins are some kind of the most trending currency that we use.

History

It was first described by a group of researchers at 1991. But they used it as digital timestamps so it is not possible to back day them. it was mostly not used until Satoshi Nakamoto adopted it in 2009. To create the digital cryptocurrency Bitcoin.

What is blockchain

A list of records that is growing more every day, Which we call a block.
By enabling the distribution not the copying of digital information. Blockchain technology formed the backbone of a new type of internet. Basically used for the digital currency Bitcoin. the tech fellowship is now discovering other possible treatments for the technology.

So, we are talking about a technology that helps us to share data by distributing it. And having many people that are able to access it. And even increase the information that it contains.

Better description

For a better understanding of this technology. just imagine spreadsheet that is repeated thousands of times over a network of computers. Then think that this network is automatically updating this spreadsheet.
So, Everybody in the network can see the sheet and whenever they update it. The network will automatically update it and duplicate it millions of times over the network.

The blockchain is holding Information exists as a shared — and constantly adjusted — database. What means everyone can access the database and its updates. But no one can modify it. This is a way of using the network that has public benefits. They don’t save the blockchain in any single location. Meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

So, the best description for the blockchain is that it a distributed ledger that is completely open to anyone. but it not editable.
What means once you add the data inside a block. It will be very hard to change it.

Block chain

Summery, the blockchains contains blocks. and every block contains information that is shared with everyone. Also, it is hard to change it after submitting. Now let us have a closer look at the single block.

The Block

blockEvery block contains 3 main type of information:

  • Data.
  • Hash.
  • Hash of the previous block.

The Chain saves data inside a block depends on the type of the block. For example, the Bitcoin block stores the transaction data. As the sender, Receiver, And the number of coins.

A block has a Hash which works as a fingerprint of the block. Every block contains a unique hash that never duplicates. It identifies the block and all of the contents inside of it.

Once when we create a block, it’s hash is calculated. Changing something inside the block will cause the hash to change. In another word, the hash is very useful when you want to detect changes to blocks.

The third element inside the block is the hash of the previous block. And this effectively creates a chain between the blocks. that technique makes the chain very secured.

So, as we see every block have a hash that points to the previous block. but the first block of the chain is not pointing back to anything. We call it a genesis block.

Blockchain Security

blockchain-secuirty

Now, let us see how data is extremely secured when we store it in the blocks of a chain.

When someone tries to hack or mess with a data in a specific block. the block’s hash will change right away.
And of course, all the following blocks will have a corrupted piece of information which is the hash of the previous block. that means the whole chain is invalid now and the one who hacked the chain didn’t achieve anything.

However, Using hashes is enough to prevent it. Computers now are super fast machines that can calculate millions of hashes in a small part of the seconds. So a good hacker with a high-end machine may be able to trace a transaction. By tempering a block and then recalculating the hashes of all the incoming blocks. to make the chain valid again.

That’s why they created something called proof or work.

Proof of work

it is a mechanism that slows down the creations of new blocks. In bitcoins case, it takes 10 minutes to calculate the proof of work and add a new block to the chain.

This mechanism makes it very hard to trace a block. because if you did, you need to recalculate the proof of work of all the following blocks which may take hours and days.

So, the security of the blockchains comes from its creative use of the hashes and proof of work. blockchain uses another method which is distributing the chain.

The blockchain network

There is no central server to hold the chains. but instead it is using a Peer to Peer method and everyone can join.

When someone joins the network, he gets a full copy of the blockchain.

Now, let’s see what happens when someone creates a new block. When it happens the block is being sent to everyone on this network. And every copy of the chain will start to verify that the block is not being tempered. Then all the copies will approve the block.

When all the nodes approve the block the send something called Consensus. When all the nodes send it then they all accept the new block.

So, to successfully hack a block you need to:

  1. Calculate the hash of the block.
  2. And then to calculate the hash of all the following blocks.
  3. Again calculate the proof of work for all the following blocks.
  4. Taking control of more than 50% of the distributed chains all over the world.
  5. Calculate the hash and proof of work of all the millions of chains that you take over.

And in real life, That is impossible to do.

Smart contracts

This is a simple smart program. That we save on a block, it allows an automated exchange of bitcoins under certain conditions.

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