Web3.0 — #2 Blockchain
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The blockchain is an expanding system that records informations in a manner that is hard or almost impossible to hack the system.Informations are stored in blocks, which are like litte of records.
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In this post, we are going to look at the following in blockchain
- Blockchain Fundamentals
- Key elements of a blockchain
- Types of blockchain network
- Types of blockchain platforms
- How does a transaction get into blockchain network
1. Blockchain Fundamentals
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
But why blockchain is so important?
Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.
A blockchain network can track orders, payments, accounts, production and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities.
2. Key elements of a blockchain
3. Types of blockchain network
There are 4 types of blockchain network
The public blockchain is a technology that came from cryptocurrency (Bitcoin). It has helped to make distributed ledger technology (DTL) more popular. It eliminates issues arising from centralization like transparency and less security.
- DLT does not store data in a single space. Instead, this application allows distribution across peer-to-peer networks.
- The decentralized nature of blockchain does require methods of verification of the authenticity of the data.
- It offers a consensus algorithm for all participating parties within the blockchain to come to an agreement about the ledger’s status.
- Public blockchains offer permissionless and non-restrictive use for anyone with access to the internet can sign onto the platform for authorization.
- Users can access past and current records and also perform mining tasks. You cannot change any viable transaction or record on said network. Anyone can verify transactions, propose changes, and find bugs.
- Unlike the public blockchain network model, the private blockchain offers a more restrictive environment such as a closed network under the management and control of one entity.
- It works the same way as a public network in terms of decentralization and peer-to-peer connections on a smaller scale. Not just anyone can join private blockchain networks. These are used on smaller networks within an organization.
- Private blockchains are also called as enterprise blockchain or permissioned blockchain
As you might suspect, hybrid blockchains combine public and private blockchain technology to enjoy the best of both realms.
- Organizations can set up a public permissionless network alongside a private permission-based network.This allows them to control who can have access to certain data that is stored inside the blockchain, or what can be publicly accessed.
- You won’t see records or transactions publicly within the hybrid blockchain system without verification that is gained through the smart contract model.The confidential data is stored in the network, but is not accessible by just anyone.
- A private organization can own a hybrid blockchain, but it still can’t change transactions.When users join the hybrid blockchain, they will obtain total access to the network.
The user’s identity is blocked from being seen by other users unless they are engaging in a transaction.
The final type of blockchain is the consortium blockchain. It is also referred as a federated blockchain.
- This type of blockchain is similar to the hybrid type with its combination of private and public blockchain elements. Where this type of blockchain differs is that it allows multiple members to collaborate across a decentralized network.
- In other words, it’s a private blockchain with restricted access to a specific group for removing risks that come from only a single entity controlling said network as it is on a private blockchain network.
The consortium blockchain is controlled by preset nodes. There is a validator node for initiating, receiving, and validating transactions that occur on the network.
The members can initiate or receive transactions only.
4. Types of blockchain platforms
A blockchain platform is one that allows developers and users to create innovative uses for existing blockchain infrastructures.
You will see that some of them are mostly related to cryptocurrency like Ethereum (ETH), non-fungible tokens (NFTs), and initial coin offerings (ICOs).
- Ethereum is the first blockchain system that allows you to create smart contracts and decentralized applications, or dApps. This platform launched in 2015.
- NEO, formerly Antshares, a blockchain platform created for scalability with a main focus on asset digitization across the blockchain. It’s China’s first blockchain.
- Waves offers a blockchain platform that is decentralized and provides an easy interface for its users to create custom tokens. It makes it easier to launch ICOs.
- EOS is similar to the Ethereum blockchain platform in terms of allowing the creation of dApps and smart contracts. The primary difference is that EOS can also be used to support enterprise-level applications.
- Stellar is based on the distributed blockchain model and acts as a payment network. It also supports ICOs.
- The IBM blockchain platform offers an enterprise solution with intuitive blockchain tools.
- Corda’s blockchain platform is ideal for use in the healthcare, digital assets, government, digital identity, insurance, and capital markets.
- MultiChain is seen as one of the most developer-friendly platforms on the market. It allows for easy blockchain customization and is ideal for streaming data.
- Tron is a blockchain platform based on operating system technology. It’s one of the fastest-growing blockchain platforms. It’s especially ideal for people who create content.
This is a very short list of blockchain platforms and brief descriptions of what they are based on and how they are used.
5. How does a transaction get into blockchain network
The original blockchain was designed to operate without a central authority (i.e. with no bank or regulator controlling who transacts), but transactions still have to be authenticated.
This is done using cryptographic keys, a string of data (like a password) that identifies a user and gives access to their “account” or “wallet” of value on the system.
Each user has their own private key and a public key that everyone can see. Using them both creates a secure digital identity to authenticate the user via digital signatures and to ‘unlock’ the transaction they want to perform.
Once the transaction is agreed between the users, it needs to be approved, or authorised, before it is added to a block in the chain.
For a public blockchain, the decision to add a transaction to the chain is made by consensus. This means that the majority of “nodes” (or computers in the network) must agree that the transaction is valid. The people who own the computers in the network are incentivised to verify transactions through rewards. This process is known as ‘proof of work’.
Proof of Work
Proof of Work requires the people who own the computers in the network to solve a complex mathematical problem to be able to add a block to the chain. Solving the problem is known as mining, and ‘miners’ are usually rewarded for their work in cryptocurrency.
Proof of Stake
Blockchain networks have adopted “Proof of Stake” validation consensus protocols, where participants must have a stake in the blockchain — usually by owning some of the cryptocurrency — to be in with a chance of selecting, verifying & validating transactions. This saves substantial computing power resources because no mining is required.
In addition, blockchain technologies have evolved to include “Smart Contracts” which automatically execute transactions when certain conditions have been met.
In this post, we have seen the basics of Blockchain and how a transaction gets into blockchain.
Will catch up in a new post with more interesting crafts till then Happy Learning :)