BEGINNER’S GUIDE TO BLOCKCHAIN : PART 1

Recently , “ blockchain “ , “ cryptocurrency “ , “ mining “ have been a buzz around the tech world , and with such hype , there also stands an unclear understanding of the basics behind these fancy words . But that ends now , because we are about to dive deep into the breakdown of this “ Blockchain “ as we know it and we start right away !!

Before jumping on to the textbook definition of blockchain , we need to know some pre required terms for a better understanding of what stands ahead.

# Centralised and Decentralised Networks :

In a Centralised network , a single node has all the authority and it retains all the power over all the aspects of the network . It is a central server that controls all the data and permissions . The “ INTERNET “ as we know it today , is an example of centralised network system .

In a Decentralised network , there is no single point of control , all the nodes have their own authority and function independently , this means that the power of authority is distributed among all the nodes in the network , which makes it more secure as there is no single point of failure . “ Block chain “ technology uses the decentralised network system.

# DISTRIBUTED LEDGER SYSTEM ( DLT )

A ledger is a record of all the transactions , similarly a digital ledger keeps record of all the transactions that take place in a network .

In Blockchain , this ledger is again , duplicated and distributed among all the peers of the network . Every time a transaction occurs , it will be recorded on all the peer’s digital ledger .

What we see here , is that there is a decentralised database managed by all the peers in the network , that’s what is called the “ Distributed ledger system “ .

Thus , Blockchain is a distributed ledger technology in which all the transactions are recorded with an immutable cryptographic signature called “ hash ”.

So what will a Hacker need to break into a blockchain network ?

If one of the blocks in the chain is tampered with , its hash value will be changed .

But the hash value of other blocks will remain the same . Thus , it won’t go unnoticed by the nodes that there has been tampering .

And in order to avoid this , a hacker needs to hack into a lot of systems altogether , just to retrieve pieces of information and then arrange them in order to get something meaningful , but to be honest , that is practically impossible and inefficient .

That’s what makes Blockchain Technology so secure . Cool , isn’t it ? ;)

# Blockchain Transaction Process : Overview

After catching on a basic idea of how the blockchain works , lets quickly see what is the format in which a transaction is processed on the network :

• Firstly , there is initiation of a new transaction process ( can be from any node in the chain ) .
• Then , this request gets broadcast throughout the network and gets picked by various nodes of the chain.
• Participants use some hardware to run an algorithm on a specific software to verify these transactions on the blockchain .
• Once validated , this transaction is added to the block and a new block is created and added to the block chain .
• This marks the completion of a transaction :)

# Advantages of Blockchain

From this introductory information on blockchain we can conclude that blockchain has the following advantages that makes it the fastest growing foundation for digital currencies and transaction :

• On point Security : Blockchain keeps our sensitive data unshakably safe with its decentralised database system . Information is kept saved across a chain of nodes rather than a single location , which decreases chances of failure .
• Transparency : With the help of Distributed ledger , all the participants with permissioned access can view the information without tampering with it , with full transparency .
• Increased Efficiency : The tradition of documentation on paper and need for a third party for transactions makes it time consuming . With DLT , there is no need to maintain multiple ledgers and the transactions can be completed faster .

So , this was a beginner centred information to understand the basics of Blockchain which has now become an important aspect for the upcoming generation due to its impactful efficiency and security in the field of digital transaction . In further parts we will dig down part by part the components of blockchain and how they function together : )