Why is it called blockchain?
We have all heard of cryptocurrencies like Bitcoin, Ripple, Litecoin and Dogecoin. You might have heard is that it is based on blockchain technologies.
Blockchains are used not only for cryptocurrency, but it is also having applications in securing supply chains and has even been used for tracking durians from farm to table.
What is a blockchain though?
This note attempts to explain what a blockchain. By understanding this, you would then understand why blockchain is a very powerful tool to secure digital assets, track your durians and more.
In order to understand this, we need to know 2 key things. These are
1. What is a Hash
2. What is a block
HASH
A hash, in cryptographic terms is very simply a code(output) that is used to represent something. That code is generated using a certain function/ program. Using the same input data will always give the same code, using even slightly different input data will give a different code.
Another thing about a hash is that it is 1 way.
What that means is that by using a program fed with the input, I can generate the code (hash), but with the code only, I can’t find my input data again.
In this way, hashing helps to prevent tampering. Under it all, a blockchain is a ledger, and bad things happen when the ledgers get tampered with.
BLOCK
A block can be thought of as 1 period (days/ hours/ minutes) of a traditional accounting ledger.
A Block is the form in which the ledger is stored. It consists of several sections which in very simple form is as below.
The block size is simply to tell the program reading the block how big it is, so that it will know when the block ends
The header contains some important data which is used to link the block back to the previous block (hash of the previous block) and timestamps.
The number of transactions is simply put, how many lines there is in the ledger for this period.
The transaction data is record of all the transactions that have been accepted on the network for that period.
So the block can actually be shown as below (breaking up the header for clarity)
BLOCKCHAIN
So finally, why is it a blockchain?
1 key fact mentioned in the previous section is that the current block header contains the hash of the previous block. In this way, the current block allows you to verify the previous block and that previous block will allow you to verify the block prior to that.
All these, with Block 1 pointing back to Block 0 and Block 2 back to Block 1 is in a representation of a chain. Hence why it is called blockchain.
One thing to note is that the first Block is called the genesis block and will have a previous block hash of all zeroes — since there is no previous block. All new cryptocurrencies and blockchain technology implementations have their own genesis block.
Using the hashes in this way will cause any attempt to tamper with the block by changing the transactions to fail as the hash will be different from what is registered in the blockchain and hence will cause the block to be disregarded. This very simple idea has now secured your ledger from an unscrupulous persons attempt at modification/
A.S.
