7.3 C
Munich
Wednesday, September 28, 2022

Brief About Blockchain Technology

Must read

Blockchain isn’t a new concept, but it has been popular since 2008. Blockchain was combined with several computing concepts and other technologies to revolutionize cryptocurrency. Blockchain promotes peer-to-peer electronic transactions using cryptographic mechanisms and eliminates any trusted third parties. It is a distributed, public and decentralized ledger.

What is a Blockchain?

A blockchain is a distributed ledger or database shared between nodes in a computer network. They allow decentralized storage of transactions in a secured manner. Blockchains are unique because they guarantee the integrity of data records and security and generate trust without the need for trusted third parties.

Blockchain’s data structure is fundamentally different from a traditional database. A blockchain collects information in block format; these groups can hold multiple information sets. Each block has a certain storage capacity linked to the previous filled block. This creates the chain of data which is known as Blockchain. Any new information that follows the newly added block combines with a new block, adding to that chain once it has been filled. As implemented in a decentralized manner, it creates an irreversible timeline. Every block is assigned a specific timestamp when added to the chain.

The foundation of Blockchain is immutable ledgers, which are records that can’t be destroyed, deleted, or altered. For this reason, Blockchains are also known as distributed ledger technology (DLT).

Blockchain categorization

Based on the permission model, Blockchain networks can be classified into two types –

  • Permission model– Blocks can only be published by a specific user, determining who can post blocks to the network.
  • Permissionless model – Anyone can create a block in the Blockchain network, which is permissible, and it’s like the public internet where everyone can participate.

What are the Blockchain components?

Cryptographic hash functions

These are the most important components of Blockchain. This hashing method is applied to data, and it computes the unique output for every input type and size (e.g., file, text, or image). Cryptographic hash functions provide vital security properties.

Public Key cryptography

Asymmetric key cryptography, which is used to create Blockchain technology keys, is crucial for understanding Blockchain engineering. It employs a pair of keys that are mathematically related. The keys are as follows –

  • Public key– This key can be made public, but it does not compromise the security of the process.
  • Private key– This is applicable when the data are to be kept secret. So as it remains secret.

Blocks

Users submit transactions to a Blockchain network via software. The software sends these transactions to a node ( or nodes) within the Blockchain network. These nodes are called blocks in a Blockchain network.

A block can also be made of two parts –

  • Block Header– It is also known as block number or block height. It contains the hash value of the previous block header and timestamp and the block’s size.
  • Block data– It consists of a list of all transactions and ledger events included in the block.

Transactions

A transaction is the transfer of digital assets or cryptocurrency between Blockchain network users. A block can contain one or more transactions. The following information is required for a transaction –

Inputs – This refers to the digital assets used in a transaction. An input is a historical event that occurred during a transaction and can’t be changed. Any user cannot add or subtract value to the digital asset. To specify the transaction’s output, we can combine multiple digital assets or divide a single asset into many. This is where the digital signature of who sent the input is crucial to gain access to the private keys.

Outputs – The outputs refer to the receivable amount of digital assets given to the recipient. Each output is composed of the following –

  • The number of digital assets that can be transferred to the new owner.
  • Identifier of the new owner
  • A list of conditions that the new owners must fulfill to spend this value

Private Key store

Software is used to secure private keys, especially when using a permissionless Blockchain network. This private key storage is called a wallet. A wallet stores private and public keys, along with their addresses. It can also calculate other functions, such as the total digital assets of an individual user.

Ledgers

A ledger is a record of transactions. It is a digitally stored part, usually in databases owned and controlled by a central body. It can be implemented in either a distributed or centralized manner.

What is the Blockchain engineering mechanism?

Once a transaction has been submitted to the network, it propagates to all other nodes. The transaction is not done automatically. It is added to the network by a publishing node. The nodes will distribute any pending transactions to them. If there is not, the last transaction in the queue will be sent. A publishing node can publish a block, which is the act of adding a transaction. A block contains a block header and data, as mentioned previously. The block header contains metadata, while the block data contains a list of validated transactions submitted to the network. It depends on the transaction’s format and the digital assets that have a cryptographical signature. These digital assets verify access to the digital assets’ private keys. In this case, invalid transactions are not accepted.

Advantages and disadvantages of Blockchain

Pros:

  • Blockchain’s speed allows users to make faster transactions than traditional systems. It is, therefore, more reliable than slower-paced systems for emergencies.
  • Less human involvement, hence more accurate.
  • Automatic verification and cost-effective
  • It is harder to alter the system as it is decentralized.
  • More efficient transactions.
  • Increased transparency in technical aspects as each block is encrypted with a hash value. Thus it is difficult to hack.

Cons

  • Lower transaction rate.
  • Design and creating a secure blockchain are much harder than building a central system.
  • As blockchain systems are immutable, it isn’t easy to fix.
  • Huge energy consumption as miners requires a lot of computing power to solve the calculation.
  • Lack of expertise in the industry.

Final word

Although it gained popularity after the names of cryptocurrency and Bitcoin, Blockchain today is a significant part of technology with many applications. Blockchain development is expected to help businesses and governments operate more efficiently and securely.

 

More articles

Latest article

error: Content is protected !!