Jan 27, 2018

[2] Blockchains

I've noticed that there is a common misconception that blockchain and bitcoin are the same thing. The reason for this might be that bitcoin was the first to implement blockchain as a core component to serve as the public ledger for all its transactions. But what is a blockchain and why does bitcoin use one?

As the name implies, a blockchain is a chain of blocks. The blocks store encrypted information about transactions and also information about themselves and where they come from. Each individual blockchain stores different kinds of information, but they all have a hash and the hash of the previous block. The chain part is given by the fact that each block contains information about the previous block, thus creating a chain. Originally this was conceptualized in 1991, and it was meant to avoid backdating or tempering documents. The security of each blockchain is dependent on the ways different properties are implemented. This include the hashing function, the proof-of-work and the distributed network.

The blockchain is a distributed ledger open to anyone and managed by a peer-to-peer network.When a new block is created, it is sent to all the members of the network. Then each member verifies the block and adds it to the chain. All the nodes in the network create consensus. If a block has been tampered, it will be rejected by the nodes and not added to the chain.

Each block is identified by what is called the hash. A hash is a unique identifier generated by a hashing function. Any change in the block would result in a change of the hash. This is because one of the properties of a hashing function is that a particular output will result from a particular input, and only from that particular one, so if you change any part of the input this will modify the output. Another important property is that the function is non-invertible.

The proof-of-work will require some processing time from the service requester. This time can vary, in the case of bitcoin is 10 minutes but in other cryptocurrencies times go usually from 10 to 14 seconds. This process makes tampering older blocks very complex, as it would be needed to recalculate the proof-of-work for all the blocks that follow the tampered one.

More info:
How does a blockchain work
Understand the blockchain in two minutes
Blockchain in 5 levels of difficulty

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