What is blockchain?

A blockchain is a digital record of transactions. A blockchain is a distributed ledger that is open to anyone and once a data has been added in a blockchain, it becomes extremely hard to tamper with. It is simply defined as a decentralized, distributed ledger that records the provenance of a digital asset. The name comes from its structure, in which individual records, called blocks, are linked together in single list, called a chain. It is a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.

History

Blockchain technique in fact is not a very new technology. It can be dated back to 1991 when research scientists Stuart Haber and W. Scott Stornetta first described it. It was originally intended to timestamp digital documents so that it is not possible to backdate them or to tamper with them.

In 1992, blockchain technology was improved by incorporating Merkle trees.

In 2002, the concept of decentralized trust within the network was formulated.

In 2005, Bitgold was introduced: a blockchain like model with proof-of-work.

And then in 2008, Satoshi Nakamoto conceptualized the theory of distributed blockchains. to create a digital cryptocurrency bitcoin and in 2009 Bitcoin was launched using true blockchain technology.

In 2014, Blockchain 2.0: decentralized apps and smart contracts was conceptualized.

In 2015, Ethereum was launched as the first Blockchain 2.0

Blockchain Functioning:

In simple language a blockchain, as the name suggests, is a chain of blocks that contain information. Programmers can relate this to data structures, typically ‘stack’, that has nodes containing some data, has an address of its own and the address of the next node.

Similarly in a blockchain, each block contains some data, the hash of the block and the hash of the previous block. Let’s look at these terms individually:

The data: Any type of data can be stored in the block. It primarily depends on the type of blockchain. For example, the Bitcoin blockchain stores the details of a transaction, such as the sender, receiver and amount of coins.

Hash : each block has a hash. Hash is a unique code that identifies a block, and all of its content . Whenever a block is created, its hash is calculated. Making any change with the content of a block will cause the hash to change.

Hash of the previous block: The third element inside each block is the hash of the previous block. This element links the blocks and creates a chain of blocks.

What makes blockchain secure?

• HASH

So if you tamper with a block, say block 1, that is in the middle of the blockchain, this will cause the hash of the block 1 to change. That inturn will make the next block, say block 2, invalid as it no longer stores the valid current hash of the previous block. So now, in block 2, you would want to change the hash of the previous block to the new and valid hash. But this in turn will cause a change in the hash of block 2. Making the block following block 2 invalid.

Thus, making a change in a block will cause all the following blocks to be invalid.

• PROOF-OF-WORK

Blockchains use proof-of-work mechanism.

In proof-of-work mechanism, every time a block is created and added to the chain, a cryptographic puzzle needs to be solved. The node that solves the puzzle pushes the answer to all the other nodes in the network. Once the network verifies the proof of work, the block will be added to the blockchain.

If you tamper with one block you need to re-calculate the proof of work for all the following blocks.

• PEER-TO-PEER NETWORK

There is no central point of storage, thus no single controlling party in peer-to-peer network unlike the traditional client-server networks. All the information on the network is constantly being recorded and transferred between the participants on the network who all store the multiple identical copies of the network’s information. These participants are known as nodes or peers. So a peer-to-peer network is a distributed network that stores and transfers data without a central server. So everyone has a full copy of the blockchain and if you want to tamper with any block, you will need at least more than 50% of the nodes to verify the change, only then that tampered block shall be accepted. Thus the information on this network is way less vulnerable to be hacked or exploited.

So the security of blockchain comes from the use of hashing and proof-of-work mechanisms and peer-to-peer network.