What is Blockchain?
Fri, Sep 18, 2020 •6 min read
Category: Code Stories / Blockchain
Blockchain was launched in 2016 as a real world-tech option. It is a public electronic ledger built around a peer to peer system that can be shared and used among users. Blockchain is to set up irreversible evidence of transactions linked to preceding transactions with time stamps. Blockchain allows for data storage, that is, transactions on hundreds of thousands of servers worldwide. Everyone on the network, a user can see every other person's entries in real-time or near real-time.
Blockchain is a transparent distributed ledger technology established on a peer to peer topology. It is a database for virtual currencies.
Each data stored in Blockchain is a block because every digital buying and selling recorded in the electronic ledger is a block. When a transaction is completed, the block will be completed. Every completed block has an exclusive code that links it securely to the next block. For every transaction recorded, the data becomes a block in the chain. Thus the name "Blockchain."
For Blockchain to be updated, there has to be a consensus between the participants. When new data is added, it is permanent and irreversible. No change can be made.
Blockchain is one of the continually trending terms in fintech. One of the reasons for this is the recent uprising demand for cryptocurrency acquisition. Especially Bitcoin and ethereum.
Cryptocurrency And The Blockchain technology
Cryptocurrency is a medium of exchange for virtual or digital currencies. It uses merely regionalized technology to allow its users to store money and also make safe payments without using or needing a bank or bank services. Cryptocurrencies run on Blockchain to record all transactions carried out by its users.
Bitcoin is the largest cryptocurrency platform.
It is the first virtual currency whose transaction was stored on the Blockchain database. The first Blockchain database housed every Bitcoin transaction that has been made. The worth of data stored on the Blockchain for every Bitcoin transaction ever done is over 160gb worth of data.
The creators of Bitcoin developed it in a way that the Bitcoin Blockchain database is run communally. The records for all the transaction on the Bitcoin Blockchain database is not in charge of one institution or computer. But every user of the Bitcoin Blockchain has access to the database. The database is accessible to all Bitcoin users, so if one of the computers keeping the records gets hacked or goes offline, the other computers won't be affected.
Blockchain is basically used for recording Bitcoin transactions because it is a virtual currency. However, Blockchain is not limited to storing only Bitcoin data.
Ether is the cryptocurrency of the ethereum Blockchain. Behind Bitcoin, the second most valuable and fast-rising cryptocurrency is Ether, which is operated on the ethereum Blockchain. Ethereum is the second-largest cryptocurrency platform. It has so many features, one of which is that apart from running virtual transactions on the ethereum Blockchain database, simple programs can also be created on the database to be able to move Ether between wallets. Ethereum is accessible to everyone Irrespective of the geographical location or background. Also, ethereum, like Bitcoin, provides easy access to digital money. Ethereum also has a smart contract feature.
Ethereum, unlike Bitcoin, was created by a group of people who are well known; Vitalik Buterin, Anthony Di Iorio, Mihai Alisie, and Charles Hoskinson.Other top cryptocurrencies include; Ripple (XRP), Litecoin (SDC), Tether (USDT), Bitcoin cash (BCH), Libra (LIBRA), Monero (XMR), Eos (EOS), Bitcoin SV (BSV), Binance Coin (BNB).
Five Major Characteristics of Blockchain Technology
Decentralised ledger Technology
Blockchain technology, as explained earlier, has no central authority. All the ledgers, which include information, records, and transactions, are shared among many individuals across the database. At creating any new block, all users are notified, so all users have access to transactions on Blockchain.
Due to the Blockchain technology's decentralized nature, the transactions carried out on the system are transparent as every block created is accounted for. And every user is notified of each block creation. The records are also unchangeable. Any data put into the system will remain permanently in the system.
The identities of Blockchain users are hidden. Only their digital addresses can be seen on the Blockchain. The Bitcoin Blockchain is, however, public, and a user's transactions can be traced if the Bitcoin address is known, but this doesn't affect the users' identities. They still remain hidden.
Immutability And tamper Detection
Blockchain uses cryptography to make the data stored in it safely. Every block created has a secured set of links developed b a muddled cryptographic function. This function can receive large amounts of data and generate hash as output. One primary part of the hash feature is that any change made in the input will generate a totally different output no matter how little it is. Therefore, any change made into a block would affect the hash output of subsequent blocks. This way, users would be able to recognize tampering at any spot on the Blockchain.
Blockchain as a data structure
Data storage on Blockchain keeps growing. On bitcoin Blockchain, the data stored is Bitcoin transactions. On Ethereum Blockchain, the data stored includes Ether transactions but is not limited to the transactions. Since each data input is represented by blocks, as the amount of data stores in Blockchain keeps increasing, the blocks also keep growing. Each block is connected to the previous one. So, all the blocks down to the genesis blocks are linked together.