Blockchain Basics
What is a Blockchain?
A Blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the Blockchain. It is basically a system of recording information in a way that makes it difficult or impossible to change, hack or cheat the system. Each transaction is independently verified by peer-to-peer computer networks, time stamped, and added to a growing chain of data.
What is a ledger?
A ledger is a book or collection of accounts in which account transactions are recorded. Each account has an opening or carry-forward balance, would record transactions as either a debit or credit in separate columns and the ending or closing balance.
What is a Peer-to-Peer(P2P) network?
A P2P network is one in which two or more PCs share files without the requiring a separate server computer or server software.
What is time stamped data?
The timestamp is a small data stored in each block as a unique serial and whose main function is to determine the exact moment in which the block has been mined and validated by the blockchain network.
What is the difference between a blockchain and a database?
A database is a system which stores and retrieves data. Just like a normal database, a blockchain also stores and retrieves data along with connecting with other peers, listening for new data, and validating the data against pre-agreed rules. A blockchain then broadcasts the new data to other network participants to ensure an updated data across the network. And all of this is done without any manual intervention.
What are the design principles of a blockchain economy?
- Networked Integrity : Trust is intrinsic not extrinsic.Integrity is encoded in every step of the process and distributed, not vested in any single member
2. Distributed Power : The system distributes power across a peer-to-peer network with no single point of control. No single party can shut the system down
3. Value as Incentive : The system aligns the incentives of all the stakeholders. Bitcoin or some token of value is integral to this alignment and correlative of reputation
4. Security : Safety measures are embedded in the network with no single point of failure, and they provide not only confidentiality, but also authenticity and nonrepudiation to all activity
5. Privacy : People get to control their data
6. Rights Preserved : Ownership rights are transparent and enforceable. Individual freedoms are recognized and respected
7. Inclusion : The economy works best when it works for everyone
More about the design principles in the upcoming articles
