Blockchain has a different perspective to different people. Developers use blockchain as a set of protocols and encryption technologies for securely storing data on a distributed network. Business and Finance blockchain is a distributed ledger and using blockchain to create a new digital currency. technologists are looking at blockchain as the driving force behind the next generation of the Internet and for others it is a tool for radically reshaping society and economy taking us into a more decentralized world.
Blockchain is nothing but a global online database that anyone, anywhere, with an internet connection, can use. A Blockchain doesn’t belong to anyone, while traditional databases which are owned by central figures like banks and governments. The entire network looks after it and thus cheating the system by faking documents, transactions and other information is impossible.
BLOCKCHAIN AND BITCOIN
Blockchain was first described in 1991 by researchers and was planned to timestamp digital documents so that it’s not possible to backdate them or to tamper with them. However later adapted by Satoshi Nakamoto in 2009 to create the digital cryptocurrency Bitcoin.
Blockchain’s most famous application is bitcoin. Bitcoin is a digital currency that is created and held electronically, and we can send it to anyone, whether we know them or not. Bitcoin provides a level of anonymity. That’s because unlike credit cards or PayPal payments, there are no middlemen such as banks and financial institutions asking for your personal information and home address. People also earn digital money by validating other people’s bitcoin transactions hence earning a small fee in the process. Banks and businesses are rushing to adopt blockchain technology.
HOW DOES BLOCKCHAIN WORK?
Each block holds data, the hash of the block and the hash of the previous block. The data that is stored depends on the type of blockchain. The Bitcoin blockchain holds the details about such as the sender, receiver and amount of coins. A block also has a hash. Hash acts as a fingerprint. Hash is used to identify the block and all of its contents. It's always unique. Once a block is generated, a hash is assigned to it. Changing something inside the block will cause the hash to change. If the fingerprint of a block changes, it no longer is the same block. The third element is the hash of the previous block. This effectively creates a chain of blocks and it’s this technique that makes a blockchain so secure.
BLOCKCHAIN AND HASHING
First block is called the genesis block. If we tamper the subsequent blocks, hashes of the blocks to change as well. So changing a single block will make all following blocks invalid. But using hashes is not enough to prevent tampering.
someone could tamper with a block and regenerate all the hashes of other blocks to make your blockchain valid again. So to mitigate this, blockchain have something called proof-of-work. It decreases the speed of the creation of new blocks. This mechanism makes it very hard to tamper with the blocks, because if you tamper with 1 block, you'll need to recalculate the proof-of-work for all the following blocks. So proof-of-work helps blockchain to maintain security.
Blockchain can also secure themselves by being distributed. Instead of having a central entity to manage the chain, blockchain use a peer-to-peer network and anyone is allowed to join. When someone joins the blockchain, they get the copy of the blockchain. When a new block is created details are sent to everyone on the network. Each node then verifies the block to make sure that it hasn't been tampered with. If everything checks out, each node adds this block to their own blockchain. All the nodes in this network create consensus. Blocks that are tampered with will be rejected by other nodes in the network.
WHAT ELSE COULD BE DECENTRALIZED?
- Voting-Voting requires a central authority to count and validate votes. Blockchain can help in maintaining the authority and integrity of voting.
- Real estate transfer records currently use centralized property registration authorities.
- Social networks like Facebook are based on centralized servers That control all of the data we upload to them. Blockchain can help in decentralizing the internet.
- Cabs-Drivers can offer their services directly to passengers and remove “Uber” as the middleman.
A ledger is a kind of database where confirmed databases are stored.
CENTRALIZED – This kind of blockchain network has single authority that controls the transactions and every process. The ledger is only with this single node. The branches are called nodes or servers. Example of centralized network is the internet providers. If the central node is shut down, the whole network collapses.
DECENTRALIZED - The ledger exists on multiple computers, often referred to as nodes. Decentralization is the process of distributing and dispersing power away from a central authority. The benefit of this network is that even if one node gets down; the whole network is not collapsed.
DISTRIBUTED – The ledger is available with every node. In a distributed system, parts of the system exist in separate locations. Advantages of distributed network is redundancy, faster communication between each node, scaling and parallelism.
TYPES OF BLOCKCHAIN
- These blockchains are open to the public and anyone can participate as a node in the decision-making process.
- Users may or may not be rewarded for their participation.
- These ledgers are not owned by anyone and are publicly open for anyone to participate in.
- All users of the permission-less ledger maintain a copy of the ledger on their local nodes
- use a distributed consensus mechanism in order to reach a decision about the eventual state of the ledger.
- These blockchains are also known as permission-less ledgers.
- Participants need consent to join the networks
- Transactions are private and are only available to ecosystem participants that have been given permission to join the network
- Private blockchains are more centralized than public blockchains
- Private blockchains are valuable for enterprises who want to collaborate and share data
- These blockchains, by their nature, are more centralized
- This blockchain attempts to use the best part of both private and public blockchain solutions.
- a hybrid blockchain will mean controlled access and freedom at the same time.
- This blockchain is not open to everyone, but still offers blockchain features such as integrity, transparency, and security.
- The members of the hybrid blockchain can decide who can take participation in the blockchain or which transactions are made public.
DISTRIBUTED LEDGER IN BLOCKCHAIN
- A distributed ledger can be described as a ledger of any transactions or records supported by a decentralized network from across different locations and people eliminating the need of a centralized authority.
- All the information on ledger is securely and accurately stored using cryptography and can be accessed using keys and cryptographic signatures any changes or additions made to ledger are reflected and copied to all participants in a matter of seconds or minutes the participants at each node of the network can access the recording shared across the network and can own an identical copy of it at the same time
- Distributed ledgers do not need proof of work or proof of stake, and offer – theoretically – better scaling options compared to blockchains like Bitcoin and Ethereum.
WHAT IS A HYPERLEDGER?
Hyperledger is like a hub for open industrial blockchain development. Hyperledger is to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology.
Linux Foundation aims to create an environment in which communities of software developer and companies meet and coordinate to build blockchain frameworks. Today Hyperledger has an impressive list of more than 100 members.
It has five different frameworks: Fabric, Iroha, Sawtooth, Burrow and Indy
Advantages of using Hyperledger
- Highly Flexible Architecture-Organization can choose what they want and what they don’t want from the framework and this allow them to build the applications based on their business requirement.
- Transaction Speed Is High In Hyperledger Fabric -Hyperledger Fabric can able to process at rates of more than thousand transactions per second. This is one of the major boost for the organizations to prefer this framework while comparing with others. Hyperledger fabric transaction speed is too high.
- Hyperledger Fabric Allows Private Channels- In case of large blockchain network, data can be shared only with certain parties by creating a private channel with just those participants. Fabric also allows private transactions and hence not every transaction can be seen by every user of the network.
- Smart Contracts-Similar to other frameworks, Hyperledger Fabric also allows to build smart contracts called “Chaincode”. The important factor is that chaincode helps to build complex logic which is crucial for industries such as supply chain as it has complex business logic.
WHAT IS ETHEREUM?
Ethereum was first proposed in late 2013 and then brought to life in 2014 by Vitalik Buterin who at the time was the co-founder of Bitcoin Magazine.
Ethereum is the Do It Yourself platform for decentralized programs also known as Dapps - decentralized apps. If you want to create a decentralized program that no single person controls, not even you even though you wrote it, all you have to do is learn the Ethereum programming language called Solidity and begin coding.
The Ethereum platform has thousands of independent computers running it meaning it’s fully decentralized. Once a program is deployed to the Ethereum network these computers, also known as nodes, will make sure it executes as written. Ethereum is the infrastructure for running Dapps worldwide. Ethereum allows people to connect directly with each other without a central authority to take care of things. It’s a network of computers that together combine into one powerful, decentralized supercomputer.
Ethereum is not a currency, it’s a platform. The currency used to incentivize the network is called Ether Ethereum goal is to truly decentralize the Internet.
WHAT IS SOLIDITY?
Ethereum’s coding language, Solidity,is used to write “Smart Contracts” that are the logic that runs Dapps. Contracts are a set of conditions and actions. Ethereum developers write the conditions for their program or Dapp and then the ethereum network executes it. They are called smart contracts because they deal with all of the aspects of the contract - enforcement, management, performance, and payment.
For example, if I have a smart contract that is used for paying rent, the landlord doesn’t need to actively collect the money. The contract itself “knows” if the money has been sent. If I indeed sent the money, then I will be able to open my apartment door. If I missed my payment, I will be locked out.
Once a smart contract is deployed on the Ethereum network, It cannot be edited or corrected, even by its original author. It’s immutable.