Blockchains- What the f***
Well to many newly fascinated minds and tech junkies, blockchains, hyper ledgers and decentralization are very confusing terms. “Don’t you worry child”, this post will help you get in the know how of what actually the fuss is all about.
Cryptocurrency, specially bitcoins came in spotlight during 2009, created by a Satashi Nakamoto. An unknown name suspected of being, maybe, a single man, a group or a community who created the bitcoins and revolutionized the world with the ledger system they followed – blockchains!
In very simple words, blockchains, are a system or records.
Yes, don’t confuse yourself, just think about the ordinary record or database your college keeps of all the students.
why is it so popular? Its distributed!
It’s not about the cryptocurrency as much as it is about the underlying support or the frame over which it is created that being blockchains. Blockchains differ from all other traditional record keeping systems in many ways but the most important one is it being distributed and decentralized. That means, blockchains are not maintained or store in a single place like the college database saved in a single server, instead it is stored in every participants own storage. This is DECENTRALIZATION!
Traditional ledger systems that you encounter in schools, colleges and most importantly banks. The problem with this system of ledgers is the lack of trust and security, since these ledgers were centralized in nature, they were maintained by a single authority, they could not be trusted. If the authority turned out to be corrupt, it would be easy for them to change the data and nobody would know since nobody else has the data to cross check with. Security was also a major issue since it being maintained at a single place, a breach would mean complete loss of data.
So decentralization was introduced as an alternative where the participants of a the network would keep their copy of the ledger which would get updated with every transaction, and anything written on the ledger is immutable and tamper proof. As the network increases more and more ledgers have to be updated for every transaction and its takes more processing power to scale the whole network for consensus and more power thus incentives rise. There are other factors too for this rise in incentives which we will discuss later.
what are these “blockchains”, made of ? Well, blocks……
Blockchains are the sequential array or blocks of which contain transaction data, like sender, receiver, amount, timestamp, public key, etc. A collection of many such transaction records make up one block and many such blocks make up a blockchain. Every time a new block is created it first checked for being genuine and also if it follows the regulations of the blockchain.
These regulations are the smart-contracts and the credibility of a block is something that is agreed upon by a majority vote from the members of the network, this is called Consensus. Building consensus from a block needs processing power, and since the network is huge, huge power is also needed. So here, miners come in to the picture.
Miners are people who rent their processing power for building consensus for the block and get incentives(cryptocurrency) in return. Every block after being added to the longest chain has to wait to be committed to the ledger, generally for six or more other blocks to get committed. Other than consensus miners also have to find a “nonce” which is a key to the hash and gives away the difficulty of the problem which is to be solved in order to mine the block.
So, that’s it for today my tech-geeks.
I’ll upload some reading materials for you to dig in.