What Is Blockchain?

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  A brief introduction to blockchain:

 

What is Blockchain?

Blockchain is a decentralized, distributed ledger that stores the record of digital assets in blocks. Each block contains a (i) previous block hash, (ii) timestamp, and (iii) relevant transaction data. These blocks are linked with the help of cryptography.

The transactions made in the Blockchain are recorded at multiple computers (nodes) so that they cannot be tampered without the consensus of the network. This makes up a big advantage of the blockchain system: its independence from a trusted third party.

A blockchain is basically an immutable database whose main purpose is to store the transaction data in particular blocks but prevent any editing of that data. So anyone is free to view the entire history of that blockchain.

 

Some Interesting facts on Blockchain Technology and Cryptocurrencies!

  1. The Blockchain market size is USD 4.9B and is projected to grow to USD 67.4B by 2026. This ascertains the fact that the prices of some cryptocurrencies and coins will mostly grow manifold. The lucrative returns that digital assets like cryptocurrencies and NFTs (Non-fungible Tokens) offer, coupled with increasing trust in blockchain technology are big boosts to the increasing adoption of the blockchain technology and its applications. Though, educating oneself about the blockchain technology is much needed before dealing with digital assets.
  2.  El Salvador, in 2021 became the first country to adopt Bitcoin as legal tender, allowing the cryptocurrency to be used in any transaction, from buying a cup of coffee to paying taxes. They even offered a $30 bonus for every citizen who will sign up on the Chivo Wallet App.
  3. The first cryptocurrency? No, it isn’t Bitcoin. It’s eCash. David Chaum, American Computer Scientist came up with eCash with his company DigiCash in 1990. eCash is still out there and trades at around $0.000029 (Dec 1, 2022).
  4. Financial institutions can save around $ 12 billion per year using Blockchain Technology.
  5. As per CNBC and Acorn, only 16% of men and 7% of women would invest in blockchain technology. Also, the gender gap in terms of investments in cryptocurrencies is far wider than in investments in traditional assets.

 

How do transactions happen on a blockchain?

Let’s take a simple step-wise tour:

(i) Each user on the blockchain will have keys: a PRIVATE key (one that is visible only to them) and a PUBLIC key (one that is visible to all users on the blockchain). These keys are essentially strings. The use of these keys is essential to authenticate transactions on the blockchain. The first step thus includes the REQUEST and AUTHENTICATION of a transaction.

(ii) A block is created storing needful details of the transaction(Name of sender and receiver, date and time of the transaction, etc.)

(iii) The transaction needs to be approved by the majority of nodes (computers on the network) in order for the block to be added to the blockchain. For this, the newly created node is sent to each node for verification. The users of these nodes are provided with incentives to verify the transaction.

(iv) The new block is then added to the blockchain and the update is distributed across all nodes. This rounds up the transaction.

 

Some key terms to know:

(i)Proof of Work (PoW): It is a consensus algorithm that is used to confirm the transaction and create a new block in the blockchain. The users of the several nodes compete against each other to find a solution to the mathematical puzzle which can easily prove the solution. This method of competing with each other is called mining. PoW is used in Bitcoin.

(ii) Smart Contract: It is an immutable (after it is signed) digital agreement stored on the blockchain. It has certain logical operations that need to be satisfied to carry out the transactions.

(iii) Double-Spending: It is the danger that one unit of a digital asset can be used more than once. This happens when a modified block is inserted into the blockchain to alter the latter which allows the doer to reacquire the token.

(iv) Proof of Stake: It makes it mandatory for the user to be a part of the blockchain (usually by holding some cryptocurrency) to be capable of validating transactions. This saves resources as no mining is needed. Ethereum blockchain uses Proof of Stake after beginning out with PoW.

 

The mystery of the founding father:

Theory for Blockchain technology started finding ground in the 1990s through the work of Stuart Haber, W.Scott Stornetta, and Dave Bayer. The first decentralized Blockchain was designed by a person or a group of persons under the name of Satoshi Nakamoto in 2008. This went on to be first implemented as a core component in the design of Bitcoin in 2009. Nakamoto remained active in the creation of bitcoin and the blockchain until about 2010 but has not been heard from since.

 

Why Blockchain?

Major win-wins of Blockchain include:

(i) Security: Data is permanent and is secured by hashing.

(ii) Cost reduction:As middlemen are not needed anymore, it reduces the cost for the businesses and builds better trust between business partners

(iii) Easy access and transparency: Anyone can become a participant in a blockchain. Histories of transactions are stored as a copy in all the nodes in the network. Also, if any change occurs in a specific node, the changes pop up in all the nodes.

(iv) No third-party fees. It shifts the power dynamic away from the ‘middlemen’.

 

Use cases:

Blockchain technology goes above and beyond just cryptocurrency and bitcoin. With its ability to create faster, economic, transparent solutions for businesses, it is impacting a variety of sectors:

(i) Travel and Mobility (ii) Banking and Real estate (iii) Healthcare (iv)Higher education (v)Identity Management and many more!

 

Most valuable languages in the new “Wild West” of the Internet include:

(i) Solidity (ii) Rust (iii)Python (iv)Javascript (v)Go

 

📍Some amazing websites which can be your Northern stars in this domain:

Buildspace- https://buildspace.so/

Blockchain- https://www.blocktrain.info/

EattheBlocks- https://eattheblocks.com/

Hope this made your ideas clearer about blockchain technology. Thanks for reading!

 

 Credit - Daipayan Hore

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