BlockChain – An Overview
"Everything will be tokenized and connected by a blockchain one day - Fred
Ehrsam"
If you look inside your Laravel installation directory, you can see that there are two
test subdirectories available.
History
The blockchain technique was originally suggested by a gaggle of researchers and was
originally dedicated to timestamp digital documents so that it's impossible to
backdate them or to tamper with them. For quite a decade it had been left unused and
it was only in 2009 by Satoshi Nakamoto who adopted the concept to make the digital
cryptocurrency -Bitcoin.
Blockchain Explained
Blockchain, as the name indicates, is a chain of blocks that contain information.
It's a distributed ledger that's completely open to anyone. So anything built on the
blockchain is transparent by its nature and everybody involved in it is responsible
for their actions. In other words, we will say that blockchain may be a time-stamped
series of immutable records (a record that can't be changed) in a distributed
system. Once the info has been added to the blockchain, it becomes very difficult to
alter it.
Each block contains some data, the hash of the block, and also the hash of the
previous block. Data stored in it depends on the kind of blockchain. For eg: within
the bitcoin blockchain, it's the transaction details. A starting block within the
blockchain is a special block since it has no previous hash key and this block is
termed as the genesis block.
In the blockchain, the transaction cost is free (though there's infrastructure
cost). Since there's no intermediary concept in blockchain, we can replace all
processes and business models which accept charging a little fee for the
transaction. For eg: one party initiates the transaction process by creating a
block. These transactions are verified by network nodes through the utilization of
cryptography and recorded in a public distributed ledger called the blockchain. Once
it's stored across the internet, it's not only creating a unique record but a unique
record with a unique history. Falsifying one record would mean falsifying the whole
chain in many instances, which is virtually impossible.
The three key features of blockchain are Decentralisation, Immutability, and
Transparency.
In decentralization, everyone within the network owns the knowledge. Without the
assistance of an intermediary, we can directly communicate with one another.
Since the blockchain is transparent, one can track the information if one wishes to.
The identity of an individual is wrapped via complex cryptography and represented
only by their public address. For eg: “Bob sent 1 BTC” instead you'll see
“1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”. This level of transparency has
never existed before within the financial arrangement.
The blockchain is immutable, so nobody can tamper with the information that's inside
the blockchain. The rationale why the blockchain gets this property is due to the
cryptographic hash function. Hashing means receiving an input string of any length
and delivering an output of a fixed length. In bitcoin, the transactions are taken
as an input and run through a hashing algorithm (Bitcoin uses SHA-256) which
provides an output of a fixed length. A hash pointer resembles a pointer, but rather
than just containing the address of the previous block, it also contains the hash of
the information inside the previous block.
In the below-shown table, though the 2 input lengths vary, the output produced is of
an equivalent length. Even changing one character can change the whole hash.
Input |
Hash |
Hai |
81a8afcae90adf4527e71dd27b08fd6810259dbc887c19c6 cfc61b749bd99151 |
Hai, my name is Ameena Abdu Rahiman |
309d2b7a55a1533452822ac9e563d8531310824ac00af5b 16a9d285212d9ed72 |
Applications
-
Smart contracts
-
The sharing economy
-
Governance
-
Supply chain auditing
-
Identity management
-
Data management
-
Land title registration
-
Stock trading
Advantages & Disadvantages of Blockchain
Pros |
Cons |
Improved accuracy by eliminating human involvement in the verification
process
| Significant technology cost related to mining bitcoin |
Cost reductions by eliminating third-party verification
| Low transactions per second |
Decentralization makes it harder to tamper with
| History of use in unlawful activities |
Transactions are secure, private, and efficient
| Chances of being hacked |
Transparent technology |
|
The blockchain is immutable, so nobody can tamper with the information that's inside the
blockchain. The rationale why the blockchain gets this property is due to the
cryptographic hash function. Hashing means receiving an input string of any length and
delivering an output of a fixed length. In bitcoin, the transactions are taken as an
input and run through a hashing algorithm (Bitcoin uses SHA-256) which provides an
output of a fixed length. A hash pointer resembles a pointer, but rather than just
containing the address of the previous block, it also contains the hash of the
information inside the previous block.