Introduction

Let’s talk about blockchain, a concept that often puzzles many. In our daily interactions with technology, we typically rely on a client-server architecture, often controlled by big companies. We have to trust them to keep our data secure, because they store your data. Also in these systems there’s vulnerability to hacking and data manipulation. For instance, during money transfers, data tampering or fake transactions can be done by a malicious person, it’s a big security risk. Also you can’t make any anonymous transactions using these systems - your identity is always known to the system.

Blockchain steps in to address these concerns. Essentially, it’s a network of computers collaborating to verify transactions and provide us more security. Unlike centralized systems governed by a single entity, it’s decentralized. So the entire network collectively holds the reins.

How do we make transactions?

Each user operates with a wallet carrying a private and public key. This setup allows users to conduct transactions within the blockchain. One of the widely used wallets these days is MetaMask. When you’re ready to send funds, you utilize the recipient’s public address to execute the transaction. These transactions get pooled together initially in a shared memory pool or a mempool, which is a collection of transactions awaiting verification before being confirmed and added to the blockchain.

How blocks are made?

Making blocks involves computers selecting a group of transactions from the mempool and attempting to create a block. A block consists of transactions, the previous block’s hash value, and a nonce value. This process of creating a block is known as mining. We use various methods like proof of work or proof of stake.

Initially, the chosen transactions undergo verification for validity. Then, they’re hashed together with the previous block’s hash and a nonce. This new hash value depends on these three elements. To meet the requirements for creating a block, the hash value must start with a specific number of zeroes. Since we can’t predict this hash value, we adjust the nonce value to modify the hash. By continuously changing the nonce, we experiment until we find a hash that meets the required condition.

This task demands immense computational power, sometimes involving checking billions of combinations and hash values before finding the correct one. When a miner discovers the suitable nonce value for a block, they receive a cryptocurrency reward for supporting the system.

Blockchains like bitcoin have a requirement of 19 preceding zeros to create a block - which is hard to get. The difficulty, indicated by the number of zeros required, adjusts automatically based on the network’s computational power. The blockchain sets a specific block mining timeframe, such as the 10-minute interval for Bitcoin, dynamically adjusting difficulty after each block creation: if a block is mined faster than the set time, future blocks will have increased difficulty; if slower, future blocks will be easier. This dynamic adjustment helps maintain a consistent block mining time.

Upon finding the nonce value, mining concludes, creating a new block. This newly created block is added to the blockchain in the system and is propagated to all other computers on the network. Every computer checks the length of it’s chain with the newly received chain and accepts the longest one - as it has done more work. You might be thinking, “What if two computers mine a block at the exact same time?” Then a fork is created - both may grow simultaneously until one of them gets bigger than the other and replaces it.

How is blockchain secure?

The beauty of blockchain lies in its interconnectedness. Each block in the chain depends on the previous one, forming a continuous link through hashes. When miners create a new block, they include the previous block’s hash. If we change something in a block, we need to redo its mining for a new hash. This change affects the next block’s link, requiring us to redo the mining for that block and every block after it.

Blockchain’s security strengthens as the chain expands. Attempting to tamper with a block becomes virtually impossible for a hacker because any alteration requires re-mining that block and every one that follows. Any change in a block’s data alters its hash, affecting the entire chain due to the interdependency. The system’s resilience stems from the substantial computational power necessary for data manipulation, reinforced by decentralized nodes collaborating, acting as a barrier against hacking attempts.

For a transaction to be accepted into the blockchain, a consensus among the majority of networked computers is required. Hacking the system demands control over 51% of the total computational power, an extremely daunting task.

Moreover, blockchain employs cryptography, ensuring data security across diverse global devices. This decentralized peer-to-peer network operates similarly to torrents, facilitating seamless communication and data synchronization among nodes.

What is the relevance of blockchain?

Blockchain helps us by shifting data storage from centralized servers to a network where our data remains under our control. This technology ensures that no single entity holds complete sway over our information, eliminating the need for blind trust in corporations, relying instead on transparent mathematical algorithms. The blockchain ecosystem offers transparency, providing us with a clear view of all activities; every transaction is recorded, ensuring tamper-proof data.

So, where does blockchain fit in? It finds application in various fields, such as cryptocurrencies, verification processes, and maintaining tamper-proof records in essential areas. Its versatility leads to numerous practical applications.

Don’t blindly use this everywhere; understand this technology and it’s use cases. Use blockchain where it is meant to be used. This technology represents a stride toward a more secure future, operating alongside current technologies. Blockchain will be used where verification and security are needed. Keep an eye out for this technology.