Blockchain Technology

With the latest emergence and adoption of blockchain technology and cryptocurrencies altogether, there is a need for proper education and knowledge of what each stands for and how they work. I have seen bizarre questions and answers been asked and answered respectively about these things.

So in this article I will try to break down the blockchain technology, what it means, how it works and the use case of this technology, then in subsequent writings I will write more on cryptocurrencies and what we need to know about them.

Let’s get down with a bit of history; block chain technology has long been in the digital space before it was ever used in cryptocurrency at all. It started as a concept in computer science that major on data structures and cryptography. The first appearance of the blockchain was the hash tree which was also known as Merkle tree patented by Ralph Merkle in 1979. This data structure functioned by verifying and handling data between computer systems. Accordingly, in a peer-to-peer network of computers, validating data was important to make sure nothing was altered or changed during transfer; this also helps to ensure that false data was not sent.

Some years after, precisely 1991; the Merkle tree was used to create a “secured chain of blocks” which is a series of data records, each connected to the one before it. This first work on a cryptographically secured chain of blocks was described by Stuart Haber and W. Scott Stornetta. They wanted to implement a system where documents’ timestamps could not be tampered with or backdated.

In 2008, a person (or group of people) whose identity is/are still not known Satoshi Nakamato conceptualized the distributed blockchain. This was implemented the following year as a core component of the cryptocurrency [bitcoin], where it serves as the public ledger for all the transactions on the network. It contains a secure history of data exchanges, utilizes a peer-to-peer network to time stamp and verify each exchange, and could be managed autonomously without a central authority.

Now more details on Blockchain

Blockchain is a public electronic ledger that can be openly shared among disparate users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one. Each digital record or transaction in the thread is called a block (hence the name), and it allows either an open or controlled set of users to participate in the electronic ledger. Each block is linked to a specific participant.

Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each and every transaction ever made in the system.

In layman’s terms, blockchain is a write-once, append-many electronic ledger.

Blockchain isn’t a single technology. Rather it’s an architecture that allows disparate users to make transactions and then creates an unchangeable record of those transactions.

So, then, how does the blockchain work?

To begin, we need to explore the concept of “keys”. With a set of cryptographic keys, you get a unique identity. Your keys are the Private Key and Public Key, and together they are combined to give you a digital signature. Your public key is how others are able to identify you. Your private key gives you the power to digitally sign and authorize different actions on behalf of this digital identity when used with your public key. This can be better explained as a traditional bank account where your account number stands for your public key and you PIN is your private key. In the cryptocurrency world, this represents your wallet address (public key) and your private key is what lets you authorize transfers, withdrawals, and other actions with your digital property like cryptocurrencies.

Every time a transaction occurs, that transaction is signed by whoever is authorizing it. That transaction might be something like “Peter is sending Sade 0.4 BTC”, will include Sade’s address (public key), and will be signed by a digital signature using both Peter’s public key and private key. This gets added to the ledger of that blockchain that Peter sent Sade 0.4 BTC, and will also include a timestamp and a unique ID number. When this transaction occurs, it’s broadcasted to a peer-to-peer network of nodes — basically other digital entities that acknowledge that this transaction has occurred and adds it to the ledger.

Each transaction in that ledger will have the same data: a digital signature, a public key, a timestamp, and a unique ID. Each transaction will be connected, so if you move back one transaction in the ledger, you may see that Chuck sent Peter 0.8 BTC at some time. If you move back another transaction, you might see that Dan sent Chuck 0.2 BTC at some other time before that.

The anonymity of cryptocurrencies come from the fact that your public key is just a randomized sequence of numbers and letters — so you are not literally signing with your own name or some sort of handle. A public key doesn’t tell you the real identity of the person behind it. You are also more or less free to generate as many key pairs as you want and have multiple cryptocurrency wallets.

Use Case of this technology

Blockchain technology can be integrated into multiple areas. From its adoption as a distributed ledger for various cryptocurrencies to implementation by financial industries, health care industries, energy, Fintech just to mention a few who had started embracing the power of the blockchain technology.

Indeed this is just the beginning for this new technology with more time and various deficiencies of the technology being look unto and addressed, there is a lot more to come from this technology.

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