It is a chain of blocks that consists of data. Initial researchers created this technology to timestamp digital documents so they couldn’t be altered. It was largely ignored until Satoshi Nagamoto adopted it in 2009 to create the digital currency known as Bitcoin. Blockchain is a distributed ledger system that is open to all. It is an amazing property. It becomes extremely difficult to change information once it is stored in the Blockchain.
Blockchain functioning process
Let’s find out more about each block. Each block contains:
- Hash of the previous bloc
Data– The data stored within a block based on the type and version of the Blockchain. The Bitcoin blockchain stores transaction details like sender, receiver and amount.
Hash Blocks have a hash similar to fingerprints. Each block has its unique hash code, just like fingerprints. After a block is created, its hash may be calculated. The block’s hash will change if there is any modification. In other words, hashes can detect changes in the block. It is not the same block if the block’s hash changes.
Hash for the previous block. This creates a chain and makes the Blockchain extremely secure. Each block will have its hash in a chain consisting of three blocks A, B and C. As B will have the A hash, C will have the B hash. Someone can alter block B, so block C with the hash of block B is not detected. The entire chain is rendered meaningless. Therefore, changing one block in a chain will render all others invalid.
Security of Blockchain Computers is extremely fast these days. There are hundreds of thousands of hashes that can be calculated every second. It will be simple to alter one block and recalculate all of the hashes from the other blocks to make the blockchain invalid. These steps have been added to make the Blockchain more secure:
- Evidence of work
- Distributed System
- Smart Contracts
Proof-of-work This technique delays the formation and completion of the block. Their tagline is Slow and Steady. It takes about 10 minutes to calculate and append the proof of work to the chain. Because you can’t tamper or alter a block, you must calculate the proof of work again for all subsequent blocks. The creative use of hashing and the “Proof-of-work” mechanism is the key to securing a blockchain.
Although cryptocurrency is a popular topic, very few people know what it is. The economic life of humankind has been greatly influenced by the use of cryptocurrencies. It was first the Barter System. Then it was precious metals like gold. Since the turn of the century, all world transactions have been made using the US Dollar. To understand the concept of currency, we must first understand how it works. All currencies around the globe operate in trust-based systems, which are monitored and controlled by a central system. It is, for example, the Federal Reserve Bank in the United States.
Because they hold Forex (Foreign Exchange Reserves) to keep their country’s economy afloat, each country’s Central Bank or Reserve Bank is known as the Reserve Bank. Based on global demand and supply, the Central Bank (or Reserve Bank) maintains its Forex. Officers and sometimes corrupt governments have managed it. The global economy suffered a severe decline almost every ten years due to the mismanagement of paper records. Cryptographers tried to solve the problem by decentralizing the currency system. However, they could not create a reliable network that would work for years.