The Capital
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The Capital

The Emergence of Blockchain…

By Somesh on ALTCOIN MAGAZINE

Click here to listen to my podcast audio of the Emergence of Blockchain — Episode One.

My motto of this writing is to provide a brief introduction to the upcoming and huge potential technology in the current world which is called Blockchain. I’ll try my best to “Explain Like I’m Five”. So without any further ado, let’s get started.

What is Blockchain? Why do we need Blockchain? Why Blockchain is super hyped right now?

The buzz-worthy technology isn’t just a fad spreading for no reason. There are new businesses that are starting to adopt blockchain systems more and more and day by day because it makes transactions faster, cheaper, and more efficient than all traditional contemporary financial services.

The out of the box feature would be the transparency between businesses and consumers will be around a hundred percent and you would surely feel more confident in investing in future businesses without any sight of hesitation. The additional add-ons are it is highly resistant against corruption and corporate fraud. And, most importantly, all micro, small, and medium financial services would be highly secured from high-level hacking without using any expensive firewalls. Hackers or thefts would be left without any big databases of sensitive information to target as such in banks.

Breaches and thefts of huge amounts of social security numbers like Aadhar cards in India, financial passwords, or credit card numbers as seen in the past with companies like Equifax or Yahoo would be a thing of the past, and consumers and businesses could make transactions with a high level of security in the future.

With the adoption of blockchain technology, we can be free from the constant dependence on banks and other middlemen in the financial chain, and also not be at the mercy of businesses who collect and hold on to our sensitive information. Instead of submitting to companies who are careless with our information, consumers can turn to the decentralized options which would allow users to store value and trade it instantly without being tethered to any central system and a long never-ending onboarding process. As we know the blockchain is still in its developmental stage, but it has already started to disrupt multiple industries in the financial sector. This is the motivation behind this writing about Blockchain. I’d like to educate and share my knowledge with the mediocre people and businesses that are looking to explore in the field of blockchain and I do have a strong instinct on the blockchain platform and its worth.

Blockchains are simple pieces of blocks wrapped with tons of data and hashes and linked with other blocks with chains.

What’s inside a Block?

It is so simple to understand a Block’s infrastructure. Each database is called a block and a complete chain of blocks forms a new ecosystem for the blockchain. A block is made up of explicit data solely owned by the relevant block and a Hash function is used to encrypt the data of the block. Apart from the two, it also stores the hash function of the previous block, this would eventually prevent the previous block from manipulating its data. Any changes in the previous block would affect the hash function and it would easy to identify the vulnerabilities.

Blockchain is a peer-to-peer distributed ledger or database which is highly secure and used to record transactions across many individual computers. The new contents in the database can only be updated by adding another block which is tightly linked to the previous block of the chain or network.

In other words, it can also be called as a peer-to-peer network running on top of the internet.

By using Blockchain as a platform, the people can carry out transactions of all sorts without the need for a central or trusted mediator like a banker.

Here, let’s imagine, Noah, purchases a book from Amazon.com and the book is priced around 20 dollars during the time of purchase. So. the blocks store information about transactions like the date, time, and dollar amount of the most recent purchase from Amazon and secures the block using a hash function.

What is Hash Function in a Block?

A hash is a function that converts a form of input data into an encrypted output of a fixed length. A hash is created using an algorithm which is essential for blockchain management and it also acts as a specific kind of “signature” for the data provided in a block.

Hashes do play a major role in the blockchain technology.

A cryptographic hash function is a very complicated formula that takes any string of input and turns it into a unique 64-digit string of output. For example, insert the word ‘ABCD’ into a hash function which would eventually generate an encrypted output of string which is of 64 digits long.

The created database is shared among network participants in a transparent manner, whereby everyone would be able to access its contents. This keeps the network transparent and secure.

Management of the database is done autonomously using peer-to-peer networks and a time stamping server. Each block in a Blockchain is arranged in such a way that it references the content of the previous block. This is where the hashes come into existence and play a primary role as said earlier.

In this way, a person knowing the “hash value” is unable to know the original message, but only the person who knows the original message can prove the “hash value” is created from the respective message.

For example, let’s consider, an orange milkshake, the person who is preparing the juice is the only one who knows the recipe of the juice. And, the person who is drinking the juice will know that it is an orange milkshake but not the recipe.

In the above example, the recipe of the juice symbolizes the original message. The person who makes juice denotes the owner of the message. The orange milkshake refers to the hash value of the block.

However, the same hash value will always result from the same data, but modifying the data by even one bit will completely change the hash. Like all computer data, hashes are large numbers which are usually written in hexadecimal.

The hashing functions are tightly associated with Avalanche Effect.

Now, let’s take a look at “What is Avalanche Effect”, As the name signifies, the avalanche effect is a huge change in the output when there is a small change in the input.

Let’s assume, A small rock rolling through the snowy mountain, and makes a destructive landslide as an output. The rock was small but the destruction that made was huge. The is the same as what this effect does.

What are the Limitations of the Hashing Function?

A cryptographic hash function should behave like a random function while still being deterministic and efficiently computable. A cryptographic hash function is considered “insecure” if a person finds an unseen message inside a block that matches a given hash value.

And also, if a person finds “collisions”, in which two different messages have the same hash value.

An attacker or a person who can find any of the above computations can use them to substitute an authorized message with an unauthorized one. However, there are multiple algorithms which are used to generate a hash function. The complexities of the algorithms are evolving day by day.

And, this is for today and in my next episode, I’d continue with different sets of algorithms used to generate a hash function to keep the blocks secure and intact.

I hope you found this introduction helpful. Please feel free to write down your feedback and reviews which would surely help me to offer better content in the next post. Also, If you find any errors or mistakes, I’d love for you to write a private note or post it directly in the comments. I look at all of ’em, I swear ;)

Have a great day!! Cheers.

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Someshwaran M

I am an Open-Source Enthusiast. I learned a lot from the Open-Source community and I love how collaboration, knowledge sharing happens through Open-Source!