In recent years we are talking about a new technology called blockchain, it is associated with the concept of Bitcoin, but what is the blockchain exactly?
There is still a bit of confusion in this topic, in that it is believed that the blockchain and bitcoin are two different things, which of course is not really the case.
This confusion is also extended to other existing cryptocurrencies.
The first blockchain concept occurs in the Bitcoin whitepiper from Satoshi nakamoto, where he explains how bitcoin works together with blockchain technology.
But let’s see what this is all about.
What is the blockchain
The blockchain or chain of blocks, called in technical jargon, is a huge distributed database that contains information using alphanumeric codes.
Suppose there are 3 people (bob, Peter and Mark), all three have to track their money movements and make a ledger.
On the ledger they report all the operations done every day, entering the amount the date and to whom the money went.
Now bob during the night, without everyone’s knowledge, tampers with the operations on the book by inserting other amounts, modifying all the operations.
The other two if they realize the day after each operation, insert a hash code made up of numbers and letters, where this code contains the data of each operation.
Each hash code is linked to the previous code, so if a person should change the code then he must change all the previous codes, in all the notebooks.
In addition, each ledger that contains the codes is distributed to all three, where everyone reports the code in their books at the same time.
Bob uses more than two days to be able to change the codes but without success.
This is because it would take a long time to change the codes from the beginning, especially if you have a lot of operations it will become impossible.
In addition, I redeem the distributed notebooks, you will have additional security when you will have to tamper with all the ledgers simultaneously.
So the Blockchain is this, it uses alphanumeric hash codes the sequences inserted inside a block, all linked together that report all the operations performed, in distributed registers.
Everyone who is part of the network has a copy of the register with the codes and can validate the blocks together
The Blockchain network
As we said before, the blockchain is a set of codes, but how does the network work?
There are many blockchains with different services, such as the Bitcoin blockchain, that of Ethereum and so on, but the function is the same.
The use of the blockchain would make no sense if there were no remuneration to use it through cryptocurrencies.
If this remuneration would not exist, a person would simply use a distributed database.
The blokchain is always combined with a cryptocurrency, as it increases its use because people are encouraged by rewards.
In order for the blockchain to work, we need a validator of the codes (blocks) that brings them back to the registers (ledgers).
In the blockchain, it occurs through validation nodes that use consensus algorithms.
The blockchain nodes
Each blockchain has validation nodes that go to validate the operations that are performed on the network and reports them on the ledger.
The nodes are the central pivot of the blockchain itself when they are the ones who keep it and make it work.
A blockchain has several nodes, all connected to each other and all having the same ledger which shows all the operations performed.
There is no more influential node than another, they are all on the same level and each node can function autonomously.
Each can have a node of a given blockchain and everyone can validate the blocks, since on the blockchain there is a Permissionless type consent.
That is, anyone can validate blocks or carry out transactions without anyone’s Permissionless.
Each node uses an algorithm to validate the blocks.
The consensus algorithm
As I said before, the nodes use consensus algorithms to validate the blocks.
- POW (proof of work)
- POS (proof of stake)
- DPOS (Delegate proof of stake)
Each of these have different characteristics but the substance is always the same, that of block validation.
The POW that is used for example by Bitcoin and Ethereum, is an algorithm where the validators are the miners that use a computing power of special computers to validate the operations on the blockchain.
The POS instead, is an algorithm used for example by the cryptocurrency Dash where the miner’s place is placed the one who holds a certain amount of the cryptocurrency.
In other words, to validate the blocks one must do the staking (the block), a certain amount of that cryptocurrency to secure the network and validate the operations.
The DPOS is finally used for example by Eos and Tron, but instead of undermining or blocking the cryptocurrency, a certain amount of that cryptocurrency is always used and delegated to a node that performs its validation.
Obviously the cryptocurrency delegate is always our property but is lent to the validating node.
Each blockchain uses a remuneration to use it.
In bitcoin, for example, remuneration occurs when the miners validate the blocks and are paid with new bitcoins.
This happens in all the blockchains even if with different algorithms the operation is the same.
The use of the blockchain
The blockchain can be used for various tasks, from a distributed server to a social network.
Being very safe but above all waiting for privacy, it has become very used.
It is currently still under development when it is still young, but it will soon be more developed.
It is being used up to now on payment systems, data collection, social networks, internet.
We have many projects in these fields that are changing the digitalization era by creating a much safer decentralized system.
The blockchain can be described using these points:
- It is safe because it uses alphanumeric codes
- It is decentralized
- You are remunerated to use it
- It is anonymous because every user, every operation within it is in the form of a hash code
- No permission is required to use it
- It is very difficult to violate it if not impossible
- To delete it you must delete the Internet
There are many things still to be improved but surely the blockchain technology will still have much to learn from us.