MARKNetwork Blockchain: Explaining Blockchain
Why is Blockchain hard to understand?
Short summary of the article:
“Do not get left behind”
»Uncounted attempts have been made to explain blockchain. Although the technology is simple enough, it just requires to be broken down into pieces to be understood completely. That is what we have done. Read the article to know what is blockchain and how it functions. «
Back in the 1950s nobody understood the Internet besides the U.S. Department of Defense. Although Internet and Blockchain stand 6 decades apart, the story is no different for Blockchain either. Around 99% of the websites define blockchain as – “a distributed, decentralized, public ledger”.
Does it sound Geek?
Whether initiated into cryptocurrency territory or not, you must have come across the term blockchain technology. And there is a good chance you still don’t know what the technology is actually all about. Good news is that blockchain is much simpler to understand and here is why.
Demystifying the blockchain
Going by the name, blockchain is a chain of blocks where
Block means – time stamped chunks of digital information and
Chain means – cryptographically bound arrangement of these blocks
The data stored in blocks are managed by multiple networks of computers – thus blockchain is a DISTRIBUTED NETWORK
These networks are not controlled by any centralized body – thus the blockchain is DECENTRALIZED NETWORK
Anyone can make transactions on a blockchain but these transactions need to be validated by the network participants.
An immutable record of all the transactions is maintained – thus blockchain is a PUBLIC LEDGER.
What kind of digital information do the blocks store?
A block stores precise information about transactions that help distinguish the two transactions in a block. To state an example let us say you made a transaction over Bitcoin blockchain and moved ‘A’ amount of bitcoin to a different account on the blockchain. Once the transaction is verified, the block will make a transaction entry along with the date, time, and bitcoin amount of the transaction.
The block also stores the identification information of the sender and the receiver but the identities are stored using a unique digital signature. This renders anonymity to the blockchain users. A unique code called “hash” is also stored in a block that makes each block on the blockchain unique.
A single block can store thousands of transactions. For any new transaction, a new entry in a new block is created. Thus, all the historical transactional data remains intact preventing blockchain entries against manipulations.
How Does Blockchain function in reality?
Whenever the transactions occur, the transaction is validated by the network that supports a blockchain. Different blockchain use different consensus protocols to verify a transaction. For example, a bitcoin blockchain uses Proof Of Work (PoW) consensus to validate a transaction. Once a transaction is broadcasted, multiple nodes (computers) try to solve the cryptographic problem associated with the transaction. The node which decrypts the problem, receives a fraction of bitcoin as an incentive and the details of the transaction are recorded on the bitcoin ledger.
Each transaction information must be stored in a block and each block must have a unique hash code.
Why is Blockchain Technology considered as disruptive?
The world was cocooned in its centralized, opaque and highly vulnerable transactional model until blockchain was introduced. The three facets of blockchain that helped it gain so much of traction are:
Thriving on the centralized models in financial systems, data management systems and even internet, we had given control of our data and money in the hands of centralized service providers. But little did we realize that these systems were highly vulnerable to hacks, single point of failure, malicious data corruption and more. Several attempts have been made by experts to decentralize the systems but blockchain proved to be the only one that ensured while everyone owns the information, nobody has the rights to tweak it.
Thus it promises to eliminate the layer of intermediaries like banks that promise us transactional service support. Using blockchain, a user can transact any kind of data without depending upon a centralized body.
Lots of people question blockchain when technology claims to be both transparent and private. To shed light on how it maintains both the facets, we will put forth an example. Let us say a supply chain is moved to blockchain. When Bosch sends some parts to Mercedes, the blockchain records the transaction as
“1MF1bhsFLkBzzz9vpFYEmvcT2TbyCt7NZJ sent 20 Parts to 1XJ1pmdLHGSacv4fgSBLnusF2GlycYm4JMW”
So, while the organization’s real identity is encrypted, the transaction details can still be seen by the network so that the organization stay accountable and honest.
Well is an undebated advantage of blockchain. The public ledger of blockchain is immutable. No single entry can be altered. Even if there is a similar kind of transaction between two identities, a new entry in the block will be created.
The cryptographic hash associated with blockchain makes it possible. A hashing algorithm is used to convert any string of data into a fixed length output. As each block of the blockchain stores the hash of previous block, if anyone tries to tamper the data in the previous block, the hash will also change drastically and this attempt to change hashes of all the blocks which is not possible practically. Thus the entries on the blockchain remain immutable.
We are living in a completely digital world. Right from our money to our identity, everything had been digitized. Amidst such a drastic transformation, the world was in need of a system that could create value and at the same time authenticate digital information. Blockchain has emerged at the right time. We at MARKNetwork are synchronizing our efforts with this digital transformation from centralized to decentralized systems by supporting from a technical stand point.
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