BLOCKCHAIN TECHNOLOGY (1.0)
Hey guys, what’s up?
Today we’ll be talking about a well-known concept, it could be something you are not used to but I promise to break it into the simplest bit ever.
So let’s dig right into it…
Over the years, the term “blockchain technology” kind of popped out of nowhere leaving a huge chunk of the masses like you and me overwhelmed and lost in the euphoria of it all.
We even wondered what it meant and the kind of problems it solves for mankind.
Could it be a block and a chain or a combination of two abstract terms we just do not understand or seem to unravel by ourselves? What evolution or innovation does it bring and how can it be a part of our greater tomorrow?
Well, I must tell you that you hopped into the right place at the right time!
First mentioned by a group of researchers in 1991, blockchain can be described as an open-source distributed ledger system where records are kept in a decentralized form with an immutable cryptographic signature.
Heavy description right? So let’s break it down.
Distributed Ledger: a system of recording transactions whereby these transactions are shared among multiple locations and databases at the same time.
Decentralized: means that no one person or entity has control over it.
Immutable: data or information stored cannot be altered or reversed by anybody.
Cryptography — (a form of encryption) to make sure that these transactions are secure and safe from malicious third parties or unauthorized users. The image below is a form of encryption that Whatsapp offers its users.
To further buttress this definition, the blockchain solves the challenges we experience with the centralized system in our world today (the concentration of power under a single authority) eg. the Central Banks make rules that other money-deposit banks follow which ultimately transfers to us being the users of this system.
With the decentralization of the blockchain, nobody makes any rules whatsoever or makes decisions on how you can transact based on daily transaction limits or daily availability.
Thus depicting the blockchain as an open and trustless system that solves the challenges of centralization in our world today.
In other words, it eradicates the functions of middlemen and government agencies. More like a peer-to-peer network where transactions are recorded and shared between nodes (participants) in the same network.
It is a chain of blocks containing information about transactions of which its content can’t be tampered with or falsified thereby removing the risk of corruption or manipulation.
Let’s illustrate this further, imagine I have a hundred dollars of which I intend to send twenty dollars to a friend. With the use of blockchain technology, I can easily authorize the debit of my wallet. Confirmation is first made on my account to ascertain that I have up to twenty dollars for my transaction to be approved. Once confirmation is done, my friend’s account is then credited and my account debited at the same time.
However, this data is collated and shared between the participants of the network who stand as witnesses to confirm that I have the stated amount. It also confirms the credit in my friend’s account
Even if I tried sending a two hundred dollar bill to my friend, after I initiate this transaction, the signal is sent to other participants in the network who then confirm if I truly have this amount before validating this offering. On confirmation that my account is void of that particular amount, my request is immediately terminated.
In terms of decentralization, no one can control or limit the number of transactions I perform. Immutability, no person can erase or tamper with these records. And of course, open-source means that the code and software controlling these transactions are available for everyone to see.
What does each block contain?
A block has these key features:
- Data of the information it stores
- A hash
- The hash of the previous block
Data
Visualizing these chains as blocks or square-shaped objects of the same size, the information of transactions stored in them is known as data. Remember I mentioned that a blockchain is a form of distributed ledger system where transactions are stored.
Hash
A hash is used as a unique identifier that goes with each block commonly used to confirm the genuineness and credibility of each block.
Hash of the previous block
The hash of the previous block serves as a form of security to the chain. In that way, it ensures the uniformity and security of the blockchain.
Once a certain amount of information is entered into a block and the block is filled, another block is created through the process highlighted above serving as a form of interconnection between these blocks.
So what then makes it a chain of blocks, and why can’t its contents be tampered with?
To better understand this concept, you can describe a blockchain as a chain of blocks that are interconnected to each other where each block holds a summary of the previous block. Simply put, it is a chain where no one chain exists without the end of its predecessor.
I’m sure we have in one way or the other seen a chain before. Visualizing a chain, you’ll notice that the end of the first chain begins the second chain and the end of the second also begins the third and the cycle goes on and on and on.
The image above is a good illustration of what the blockchain looks like. The first block refers to the genesis block which contains information about the transactions stored in it, and a hash. The second contains the hash of the previous block, its own data, and its current hash hence the chain linking them together.
Whenever a new block is created (data included in it), it is distributed among the nodes (participants of the network) who then confirm that this block is intact and valid before adding it to their block.
Forming a peer-to-peer network and using a consensus mechanism (set of rules) where nodes communicate with each other and participants agree on certain rules respectively, the blockchain makes use of cryptography.
This allows for secure communication thus making provision for the authenticity and confidentiality of messages, therefore, making it complex for unintended participants to understand.
This makes it difficult for malicious people to tamper with it because there is no central authority and blocks have been distributed among participants. For anyone to tamper with a blockchain, you’ll have to gain access to each node and also recalculate the hash of each block which is highly impossible to do.
Today, blockchains have a hundred and one use-cases of which cryptocurrencies are just a small part of it. Bitcoin being the first use-case of blockchain technology has gained a lot of traction and has been in existence since 2009.
With the rise of the blockchain, many organizations around the world now seek ways to incorporate this technology into the product and services that they offer.
Something like moving with the trend as no one wants to be caught unawares, or caught sleeping on the bicycle!
Conclusion
With the rise of Cryptocurrencies, Decentralized Finance (Defi), Decentralized Autonomous Organizations (DAOs), and a whole lot of blockchain-intensive projects and use cases, we can see that this technology has come to stay.
Want to discuss or understand more about this technology, connect with me:
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https://www.linkedin.com/in/gloria-echendu
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Check out my other articles on Medium:
https://medium.com/@echendugloria
I remain your Favourite Web3 Lady.
Thanks for reading.
