What is blockchain?
YOU HEAR THE WORD “BLOCKCHAIn” THROWN AROUND AND ITS TOTALLY UNDERSTANDABLE IF YOU THINK ITS TOO SOPHISTICATED TO UNDERSTAND. WHAT IF I TOLD YOU ITS THE OPPOSITE.blockchain is very simple and easy to understand. IN SIMPLE TERMS ” A BLOCKCHAIN IS JUST A DATABASE”.
There are some peculiarities with these databases.
1)blockchains are append-only.What does append-only mean? It simply means that you can only add information – you can’t delete any information that was added, nobody can, or even change it in any way.
2)Each entry (called a block) in the database is cryptographically linked to the last entry. In plain English, each new entry must include a sort of digital finger print (hash) of the last one. So, if each finger print point back to the last one, you end up with a chain of blocks. Hence :Blockchain”.
3)A blockchain is immutable: You can’t change any information without everyone observing. If you alter a block, it changes the fingerprint. And since that finger print is consisted of in the next block, the next block is altered too. And because that block’s fingerprint … well, you get the idea. You wind up with a cause and effect where any change becomes evident.
REAL WORLD EXAMPLE:You and your great mates Susan, Tim, Harry and Charles are running the software application. You might state “I wish to send five coins to Bob.” You send that instruction to everyone else, however the coins aren’t sent to Bob instantly.
Harry might choose at the same time to send Susan 5 coins. She sends her instructions out to the network. At any time, a participant can gather up the pending instructions to develop a block.
If anyone can make a block, what stops them from unfaithful?
It probably seems really attractive to you to develop a block that says “Charles pays me 2 million coins.” Or to start purchasing first class flight tickets and diamonds from Harry by making transactions with funds you do not own.
That’s not how it works in blockchain, fortunately. Because of something called something called “a consensus algorithm”. In other words, its impossible . Because of some cryptography, game theory, and a consensus algorithm, the system prevents you from investing funds you shouldn’t have the ability to spend.
A consensus algorithm is a mechanism that enables users or devices to coordinate in a distributed setting. It requires to ensure that all representatives in the system can settle on a single source of truth. Even if some representatives fail. Simply put, the system should be fault-tolerant.
Relatable real word comparison:
In a central setup, a single entity has power over the system (In this case lets use a bank). Most of the times, they can make changes as they please.There isn’t some intricate governance system for reaching consensus among lots of administrators.
However in a decentralized setup (blockchain), it’s a whole other story.And here is why blockchain is so exciting and transparent. Let’s say we’re dealing with a distributed database.How do we reach an agreement on what entries get included? Overcoming this challenge in an environment where complete strangers do not trust each other was maybe the most crucial advancement paving the way for blockchains. In this article, we’ll take a look at how agreement algorithms are important to the functioning of cryptocurrencies and distributed ledgers.
In cryptocurrencies, users’ balances are recorded in a database, which is the blockchain. It’s necessary that everyone (or more properly, every node) keeps a similar copy of the database. And blockchain is built in this way. Everyone has the same database information. No one has higher authority access than the other. What i can see and the information i have access to, is is exactly the same as what Sandra sees, John sees and also you see. yes you!.
Public-key cryptography makes sure that users can not spend each other’s coins. There still needs to be a single source of reality that network participants rely on, to be able to determine whether funds have actually currently been spent.