What is a Blockchain?

The word ‘blockchain’ has become the buzz of the era with the increasing popularity of Bitcoin. Although the concept of the technology has been around since the late 90’s, its potential went rather unrecognized until Bitcoin made use of it. The blockchain we see today was deviced in 2008 by Satoshi Nakamoto. It is also believed that Satoshi Nakamoto can be a group of people. His origins or any information about Satoshi Nakamoto stays unknown to this date.

As interesting as it may sound, most individuals struggle to understand the concept of the blockchain technology. This article is aimed at explaining the basic concept of what a block chain is and how it works, so let’s get down to business.

What is a blockchain?

At a very basic level, think of the blockckain as a chain of blocks linked in a chronological order, where each block has the ability to store information. This chain is not owned by any ‘one’ person or company (decentralized ), because an exact copy of this chain is present in every personal computer that is in the blockchain network (distributed). The blockchain network is a peer to peer network where any computer in the network can connect to another computer in the network directly without having a middleman. If an individual joins the network right at this moment, he too will get an exact copy of the chain as of now. This feature makes the blockchain decentralized as well as distributed.

The blockchain system enables anyone in the network to add valid blocks of data into the chain but changing any of the data inside a block is almost impossible thanks to the use of cryptography and other protection mechanisms. That is why the blockchain is known as an append only chain.

How does it work?

Let us first consider the characteristics of a block in the blockchain. Each block in the blockchain contains 3 pieces of information.

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

The very first block in the blockchain stores only its hash and it’s data. It is also called the genesis block. The information stored as data in a block depends on the type of the blockchain (ex: blocks in Bitcoin’s blockchain store transaction information containing the sender the receiver and the amount that was sent). A single block can be uniquely identified using it’s hash. The process of storing the hash of the previous block creates the chronological order.

Once information is recorded inside a block it becomes very hard to change that data. There are 3 main reasons for that.

One reason is the hash of each block. Changing any of the data inside a particular block will cause the hash of that block to also change, making the rest of the blocks in that chain also invalid.

The second reason is the process of calculating the proof of work. Blockchains utilize something called the proof of work that is a certain mechanism that slows down the creation of new blocks. It is a calculation that needs to be done in order to add a new block to the chain (ex: It takes 10 minutes to calculate the proof of work and add a new block to Bitcoin’s blockchain).

The third reason is the fact that the blockchain is decentralized and distributed. Due to this reason, more than 50% of the nodes in the peer to peer network must come into a general agreement on which blocks have been tempered with, thus proving to be invalid and which ones are not. If a particular block has been tampered with, that block will be rejected by the other nodes in the network.

If an individual really wanted to tamper with a block he would have to re-calculate all the hashes of the other blocks in the network, calculate the proof of work of each of the blocks and also take over more than 50% of the network. Doing all of this is highly impossible, which makes the blockchain secure.

When a new member joins the blockchain network, a full copy of the chain as of that moment will get downloaded to his personal computer. This network is open to anyone, so anyone who wants to join can join in to this peer to peer network. When a new block is created it will be sent to all the people in the network and they will come to a common agreement on if this block has been altered or not. If more than 50% of the participants in the network acknowledges that a block is valid, each node in the network will add that new block to it’s chain. If more than 50% of the network thinks that the block has been altered that block will get rejected by all the nodes.

This is the basic concept of how the blockchain works. Bitcoin’s blockchain is rather similar to this but it has more concepts like mining. I hope you were able to get a basic understanding of the blockchain by reading this article.

Have a nice day fellow geeks. Happy reading!