A blockchain is like a masively backed up digital notebook that keeps track of transactions in a way that everyone can see and trust. It is decentralized, meaning no single person or company controls it, and it is public, so anyone can look at the records. This makes it very hard to change any information without everyone noticing.
Everyone Can See It: Imagine if everyone in your class had the same notebook. If someone wrote something down, everyone would see it. That’s how a blockchain works—everyone can look at the information.
No Boss: There isn’t just one person in charge of this notebook. Instead, lots of people share it, so no one can change things by themselves. This makes it fairer.
Hard to Change: If someone tried to change what was written in the notebook, everyone else would notice right away. It’s like if you tried to erase something in your class notebook; your friends would see it and know you changed it.
Multiple Notebooks: To get closer to how it really is, instead of just one notebook, now imagine that everyone in your class has their own copy of the same notebook. Whenever someone writes something down, all the notebooks get updated at the same time. If one notebook gets lost or damaged, there are still many other copies that have the same information. This means nothing gets erased forever.
Said more technically, a blockchain is a decentralized, distributed, and public digital ledger that records transactions across multiple computers, making it impossible to alter the record without altering all subsequent blocks and reaching a consensus of the network[1]. Key features of a blockchain include:
– Blocks: Think of blocks as pages in the shared digital notebook, of which there are many copies. Each page (block) contains a list of transactions, a unique code (called a hash) that links it to the previous page, and the time the page was created. This way, all the pages are connected in order, forming a chain. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data[1].
– Consensus: Before a new page can be added, most people (or computers) in the network need to agree that the information is correct. This agreement process is called consensus. The blockchain network relies on a consensus mechanism to verify and confirm transactions. When a new block is added to the chain, the majority of nodes must agree on its legitimacy based on permissions or known as consensus mechanisms[4].
– Immutability: Once data is added to a block, it cannot be altered, providing a secure and immutable ledger for tracking transactions and assets[5].
– Cryptography: The linking of pages uses complex math (cryptography) to keep everything secure and in order. locks are linked using cryptography, ensuring the integrity and chronological consistency of the data[3].
– Cryptographic Hash: A hash is just a fixed-size string of characters generated by a hash function (some code) from input data of any size. This output, often referred to as a hash value, hash digest, or message digest, serves as a unique identifier for the original data. Certain math functions allow this to happen.
- Fixed Hash Size: Regardless of the size of the input data, the hash will always produce a fixed-length output. For example, SHA-256 generates a 256-bit hash value.
- Deterministic: The same input will always yield the same hash output.
- Uniqueness: Ideally, no two different inputs should produce the same hash (collision resistance). This property is crucial for ensuring data integrity and authenticity.
How Blockchain Updates Work
Perhaps the anonymous inventor of the blockchain realized that his species was filled untrustworthy individuals, and thus, honor systems based on trusting authorities do not work in the long run. We do not know what his thoughts on this were but the great thing about the blockchain is that cheating prevention is built-in deeply at the core of how the entire system works[8].
- Blocks and Hashes: Each block in the blockchain contains a list of transactions and a unique code called a hash. This hash is created using a special math formula that takes into account the information in that block and the hash of the previous block. This means that every block is linked to the one before it.
- Tampering Detection: If someone tries to change the information in a block, its hash will change. Since each block’s hash is connected to the previous one, changing one block will make all the following blocks have incorrect hashes. This makes it easy to spot tampering because the chain will break.
- Consensus Among Nodes: The blockchain is stored on many computers, called nodes. When a new block is created, it must be approved by most of these nodes. If someone tries to add a block with tampered information, it won’t match the copies held by other nodes, and they will reject it.
- Decentralization: Because there are many copies of the blockchain spread across different nodes, there isn’t just one place to control or change the information. This makes it very hard for anyone to alter the records without being noticed.
The principles of decentralization, immutability, consensus, transparency, and automation collectively contribute to a robust framework for fraud prevention in various applications, from financial transactions to supply chain management and beyond
Who Pays for Storage?
- Node Operators: Individuals or organizations that run nodes are responsible for storing the blockchain data on their own hardware. They bear the costs associated with storage, such as electricity and hardware maintenance.
- Incentives: In many blockchain networks, operators may receive rewards (like cryptocurrency) for maintaining their nodes and validating transactions. This incentivizes them to continue supporting the network[6][7].
How Many Nodes Are There
As of now, the estimated number of Bitcoin nodes varies among sources, with figures ranging from approximately 18,000 to 83,000. Specifically:
- Bitnodes reports around 18,691 reachable Bitcoin nodes.
- Other estimates suggest that there are about 13,000 to 50,000 active nodes, depending on the source and time of reporting.
For Ethereum, the number of nodes is also significant, with estimates around 11,000 active nodes.
Viewing the Blockchain in a Web Browser
To view the blockchain using a web browser, you can use blockchain explorers. These are online tools that allow users to search for transactions, blocks, and addresses on a blockchain. Here are some popular options:
- Blockchain.com Explorer: Offers a comprehensive view of Bitcoin transactions and blocks.
- Etherscan.io: Specifically for Ethereum, allowing users to track transactions and smart contracts.
- Blockchair.com: Supports multiple cryptocurrencies and provides detailed analytics.
Simply enter a transaction ID or wallet address into the search bar of these explorers to see detailed information about the blockchain’s activity.
Blockchain technology has various applications, including cryptocurrencies, supply chain management, and secure data storage. It is known for its ability to provide transparency, security, and immutability in various industries[2].
There are Different Blockchains
As you may have noticed with the example of Bitcoin and Etherium, there are different blockchains in use for various cryptocurrencies, each tailored to specific functionalities and use cases. Here’s a brief overview of some prominent blockchains associated with well-known cryptocurrencies:
Major Cryptocurrencies and Their Blockchains
- Bitcoin (BTC):
- Blockchain Type: Public
- Purpose: Primarily a digital currency for peer-to-peer transactions without intermediaries. It was the first cryptocurrency, introduced in 2009 by Satoshi Nakamoto.
- Ethereum (ETH):
- Blockchain Type: Public
- Purpose: Beyond just a cryptocurrency, Ethereum supports smart contracts and decentralized applications (dApps), allowing for programmable transactions.
- Ripple (XRP):
- Blockchain Type: Public
- Purpose: Designed for facilitating real-time cross-border payments between financial institutions, focusing on speed and low transaction costs.
- Litecoin (LTC):
- Blockchain Type: Public
- Purpose: Created as a “lighter” version of Bitcoin, it allows for faster transaction times and lower fees.
- Cardano (ADA):
- Blockchain Type: Public
- Purpose: Focuses on sustainability and scalability, using a proof-of-stake consensus mechanism to validate transactions efficiently.
- Binance Smart Chain (BNB):
- Blockchain Type: Public
- Purpose: Supports smart contracts and is designed for high-speed transactions with lower fees, primarily used within the Binance ecosystem.
Viewing Different Blockchains
To explore these blockchains, you can use blockchain explorers specific to each cryptocurrency. Here are some popular explorers:
- Bitcoin Explorer: Blockchain.com Explorer
- Ethereum Explorer: Etherscan.io
- Ripple Explorer: XRP Charts
- Litecoin Explorer: BlockCypher Litecoin Explorer
- Cardano Explorer: Cardano Explorer
- Binance Smart Chain Explorer: BscScan
These tools allow users to view transaction histories, wallet balances, and other relevant data on each blockchain.
Conculsion
In a blockchain network, participants play different roles, such as validators, miners, or nodes, which are responsible for maintaining the network and verifying transactions[1]. The technology enables secure sharing of information, allowing for the creation of an unalterable or immutable ledger for tracking orders, payments, accounts, and other transactions[3].
Read More
[1] https://www.synopsys.com/glossary/what-is-blockchain.html
[2] https://www.investopedia.com/terms/b/blockchain.asp
[3] https://aws.amazon.com/what-is/blockchain/
[4] https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-blockchain
[5] https://www.ibm.com/topics/blockchain
[6] https://www.techtarget.com/searchstorage/definition/blockchain-storage
[7] https://www.mongodb.com/resources/basics/databases/blockchain-database
[8] https://satoshi.nakamotoinstitute.org/emails/cryptography/6/