Hi guys! At last, today we’ll find out how the heck blockchain actually works. Our “quick” guide won’t keep remained any other questions about this point. Well, let’s start!
What do I need your fancy blockchain?
A blockchain is a tool to store data and this data comes in blocks. These blocks are connected together, and this makes the data stable. When a block is connected to the other blocks, its data can never be changed again. It will be public to anyone who wants to see it ever again, in the exact way it was once added to the blockchain. Lots of people nowadays call this technology revolutionary due to its transparency and decentralization. For example, you can buy a house and add all your property rights to the blockchain. Nobody can change this data in any way. Sounds great, huh? Now let’s figure out how this works.
How does it work in BTC Blockchain?
The Bitcoin blockchain is the first blockchain ever created. So let’s choose Bitcoin (BTC) for an example. BTC Blockchain is a giant track record of all the Bitcoin transactions that have ever happened. Each 1MB of data in the Bitcoin network is called “Block”. These blocks are linked (crypto enthusiasts call it “chained”) together. For this purpose, every block takes a unique signature that matches to exactly the string of data in that block. If something inside a block changes, the block will get a new signature. This happens through so-called “hashing”.
This means that changing a single block requires a new signature for every other block all the way to the end of the chain. As you understand, it’s supposed to be impossible. To better understand this, you need to know more about hashing:
How the hash is created?
Well, imagine. You need to send 53 Bitcoin to your uncle Teddy. This string of data now requires a signature. This signature is created by a cryptographic hash function. It’s a very complicated formula turns any string of input into a unique 64-digit string of output. If a single digit of the input changes, the output will be totally different.
In this way, a cryptographic hash function always produces the same output for the same input. This function gives the blocks their signatures. So The input of the cryptographic hash function is the block data, and the output is the signature that relates to that block. There is a huge bunch of different hash functions, but the BTC hashing function is the SHA-256 hashing algorithm. Note that blockchain accepts only hashes which meet certain requirements. It’s called a Mining process.
Mining process.
Recently we posted an article about Mining, you can check it via the link: https://medium.com/endpass/what-is-mining-8d4f02f4e0c9
Well, I can’t understand yet, why is blockchain immutable?
As we spoke previously, changing a block will unchain it from the all subsequent blocks. In order for an altered block to be accepted by the rest of the network, it needs to be chained to the subsequent blocks again. This will require every block that comes after it to get a new signature. Giving all of these blocks a new signature will be very expensive and a very long process but seems to be possible. But it’s impossible and here is the reason why:
Let’s say an evil ugly miner called Igor has changed a block of transactions and is now trying to add new signatures for the rest of the blocks in order to have the network accept his correction. He will face a problem there: the rest of the network is also calculating new signatures for new blocks. Igor will have to calculate new signatures for all of these blocks too. He needs to keep all of the blocks chained, including the new ones, which are being added every single minute. So, Igor will inevitably fail in his evil plans.
Now you know everything and will never call Bitcoin “Beethoven” 🙂
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