INTRODUCTION TO BLOCKCHAIN 101- All you need to get Started in Blockchain Technology
Have you ever thought of what happens to your money in the bank? Does the bank keep this money, waiting for you to come to take it back? Have you ever had or witnessed a scenario where you want to withdraw a certain amount of (YOUR) money from the bank and you were told it’s unavailable or that you are unable to withdraw such an amount of money? That’s because the money in your bank is not your money. it is under central custody and anything can happen to it at any time. This is how the evolution of the blockchain came into existence.
What is a blockchain?
A blockchain is a distributed ledger or database that is shared among different nodes of a computer network. It stores information electronically, facilitating a secured and decentralized transaction.
In laymans terms, blockchain is a record book, that records all transactions made on the network without the need of a third party. For instance, if you want to send money to someone, you will require the services of the bank. This means that the bank will own your details as much as the details of the person you are sending the money to. Also, there are cases where there may be a delay or network issues which may cause the transaction to be delayed.
Blockchain allows you to send transactions without any such mediator as the bank, and the transactions made on the blockchain are shared amongst all the computers associated with that blockchain, which means that, it is difficult to delete or edit any transaction that has been made on the blockchain.
Features of the Blockchain
Amongst the many features of the blockchain are:
- Decentralization: The blockchain eliminates some of risks associated with data being held centrally by employing public key cryptography as it’s means of blockchain security. A public key (consists of a long strings of numbers and alphabets) is an address on the blockchain, that others use to interact with you. Any tokens sent across the network are recorded as belonging to that address. It has no name nor location so, your identity is safe
- Openness: Blockchain technology are user friendly and open to everyone unlike some traditional ownership records, which, still require physical access to view.
- Permission-less: This means that just any body can make transactions on the blockchain. It requires no permission or approval from anyone.
- Immutable: The blockchain is permanent and un-editable. This means that every transaction has a permanent and unalterable record across several nodes of computers.
- Distributed: All network participants have a copy of the ledger for complete transparency. The distributed ledger Technology will provide complete information about all the participants on the network and transactions.
- Security: Every information on the blockchain is hashed cryptographically which means that every piece of data has a unique identity on the network. And any attempt to modify the data means to change all the hashed identity which is quite impossible.
The blockchain industry is not a new innovation however., its development is still in its very earliest stages and this is why there is need for more blockchain developers and engineers. The blockchain once initiated cannot be shut down however, it can be worked upon, improved and validated. This is an important feature of the blockchain, as stated earlier that it is connected amongst different nodes of computers (Transparency).This simply means that even if one computer shuts down, it does not affect other computers as they will continue to run smoothly, or maybe not smoothly.
Ever wondered what happened in the year 2021, when some social media platforms like Facebook, Instagram, etc shut down for a few hours? There was panic all over the world because it affected peoples businesses and connections. In fact, statistics according to downdetector that tracks outages said it was the biggest failure they have ever witnessed as it had over 10.6 million problem reports from all over the world.
Even the owner of Facebook Mark Zuckerberg, was not exempted as he had lots of losses and also had to apologize to everyone on his social media profile.
The innovation with a blockchain is that it runs 24/7, guarantees the security of data records, and generates trust without the need for a trusted third party. Now, we shall be considering the different types of blockchains
Types of Blockchains
The blockchain aside from its general characteristics of decentralization, also have different structures. Some blockchains serves are host to other blockchains which means other blockchains can be built on them, while other blockchains serves other purposes.
There are four (4) different types of blockchain structures structures, thus:
- Public Blockchains
- Private Blockchains
- Consortium Blockchains
- Hybrid blockchains
- Public Blockchains
Public blockchains are blockchains that do not require permission to function. Anyone can join irrespective of who you are because they are entirely decentralized. This type of blockchain allows all participants to have equal rights to access the blockchain. They are primarily used for exchanging and mining cryptocurrency. There are so many advantages attached to this type of blockchain but one of the vital advantage is that they are completely independent of organizations that created them. Hence if the organization that created them ceases to exist, the public blockchain will still be able to run.
Examples of public blockchains are Bitcoin, Ethereum and Litecoin etc.
- Private Blockchains
Private blockchains, which are also known as managed blockchains, are blockchains that are controlled by a single entity. In a private blockchain, the central authority determines who can be a participant. Private blockchains are only partially decentralized because public access to these blockchains are totally restricted.
Examples of Private blockchain are Multichain, Hyperledger Fabric, Hyperledger Sawtooth, Corda etc.
- Consortium Blockchains
Consortium blockchains also known as Federated blockchains are permissioned blockchains governed by a group of organizations (federating units), rather than one entity like private blockchain. In this type of blockchain, some aspects of the organizations are made public, while others remain private. Consortium blockchain enjoys more decentralization than private blockchains, resulting in higher levels of security.
Examples of Consortium Blockchain: Marco Polo, Energy Web Foundation, IBM Food Trust, R3 etc.
- Hybrid Blockchains
Hybrid blockchains are blockchains that are controlled by a single entity, but with a level of oversight performed by the public blockchain, which is required to perform certain transaction validations.
Examples of Hybrid Blockchain: Dragonchain, XinFin’s Hybrid blockchain etc.
In blockchain technology, information’s are collected in groups, known as blocks. These blocks have a timestamp which signifies the exact time of the transaction, making it transparent for everyone on the blockchain to see, and irreversible. Also, the blocks have certain storage capacity, which when filled, are closed and linked up to the previously filled block. This forms a chain of data is known as the blockchain.
For every blockchain,. There is a genesis block. A Genesis Block is the name given to the first block a cryptocurrency, such as Bitcoin, ever mined. The genesis block is the very first block of a blockchain, which contains the rules for that blockchain itself. In order to join or create any network, the data for the genesis block must be included. Then, all new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled.
These are some of the things you need to understand before getting started in the blockchain technology. I hope you learnt something beautiful today. Don’t hesitate to share your opinions or questions in the comment section.
Thanks for reading
About the Author
Igwe Ihuoma Patience is a self-taught creative and industry-specific content writer, and cryptocurrency enthusiast with 2years plus experience and knowledge of the constantly evolving blockchain space.
I am skilled in content creation, copywriting, curating captions, video editing & graphic designing with mobile phones and I teach others how to get started in the cryptocurrency and blockchain space and My goal is to make blockchain learning and updates easy for anyone to understand.