Fundamentals Of Blockchain
The blockchain is a public database on which ever-mounting records of value transactions are published. The records are published in the form of blocks, and once published, they cannot be edited or deleted, which guarantees the authenticity of the blockchain database.
The blockchain protocol is open source; which means that it’s the peers that provide computational input, and they earn new BTC’s as the reward from the network. Since the blockchain system has no central authority, it follows that its dependant, the bitcoin network, operates autonomously.
Although the blockchain technology is the backbone of the cryptocurrencies, the technology is applicable in others sectors like banking and media as well.
When blockchain is mentioned, the name of a figure thought to be an anonymous programmer or a group-name, Satoshi Nakamoto, must come up. Satoshi was the original publisher of the Bitcoin Network into the public digital ledgers, and so, he’s credited as the originator of the blockchain technology. Programmers have hailed the blockchain as the second generation of the digital revolution.
The digital revolution began with the creation of the internet; because through the internet, most data was made available to the world. Now we have a new technology that is resistant to data modification; this technology may be classified as 2nd generation of digital revolution; the blockchain technology.
If we interpreted the banking world as blockchain; the bank statements would be blocks i.e. records of transactions, and the balanced books of the banks, which increase by the year, would be the blockchain i.e. the public ledger.
The blockchain technology shot to prominence through its application in the creation and transfer of digital value tokens without third party involvements. The elimination of the middleman coupled with its decentralized system is what makes the blockchain look like a miracle. But more importantly, the blockchain can power up other software beyond the crypto market. If the technology were to be applied in general elections; we’d get laser-accurate results after voting, because the system is hacker proof!
I mentioned blocks above, but precisely what are blocks?
Right now, the Bitcoin network is carrying out many transactions between peers stationed all over the world, but the transactions don’t go straight into the public ledger, but rather, they are first recorded in “blocks”, and after ten minutes pass, a block is time-stamped and published onto the public ledger, with a link to the previous block. A block is a file containing many single entries. The blocks will continue piling up on the public ledger until all the BTC’s (21M) have been mined.
The problems associated with blockchain technology are not so much technical as they are philosophical. The system is perfect. Even all the hack-jobs you have heard about happened at the wallet company level and it’s not that the blockchain was compromised.
But, if we are talking about a system that is decentralized, is that too feasible, considering we are humans? I mean humans almost always need to be restricted or they’ll find ways to create loops and abuse the system.
Another worry concerns a technical characteristic of blockchain; precisely what does it mean that the blockchain is encrypted? Could it seem only encrypted to the average user, and there were others who saw right through the algorithms? I mean, cryptography is an invention of man, right? How can you invent what you never understood?