If you have been following banking, investing, or cryptocurrency over the last ten years, you may be familiar with “blockchain”, the record-keeping technology behind the Bitcoin network.
What is Blockchain?
- At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (block) stored in a public database (chain).
- It's a new way of storing and moving that data, wherein instead of holding that data in one place the information is spread over thousands of nodes across a network, all locked together with the help of cryptography.
- It gives us a DB that is decentralized or a digital ledger of transactions anyone on the network can see using cryptography to keep exchanges secure.
Important parts of a Blockchain :
1. NODES :
- Nodes form the infrastructure of a blockchain.
- They store, spread and preserve the blockchain data, so theoretically a blockchain exists on nodes.
- A full node is basically a device (like a computer) that contains a full copy of the transaction history of the blockchain.
2. BLOCKS :
- A Block records some/all of the most recent Bitcoin transactions that have not yet entered any prior blocks.
- Thus, a block is like a page of a ledger or record book. Each time a block is 'completed', it gives way to the next block in the Blockchain
DISCLAIMER : I've used Amazon as an example for illustration purposes only, Amazon retail does not work on a blockchain principle as of this writing
The “Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts:
- Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon.
- Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon Inc. Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.
- Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms.
3. MINERS :
- Miners validate new transactions and record them on the global ledger (Blockchain). On average, a block ( the structure containing transations ) is mined every 10 minutes.
- Miners compete to solve a difficult mathematical problem based on a Cryptographic Hash Algorithm.The solution found is called the Proof-Of-Work.
4. NONCE :
- A Nonce is an abbreviation for "number only used once" which is a number added to a hashed or encrypted block in a blockchain that, when rehashed, meets the difficulty level restrictions.
- A nonce is the number that blockchain miners are solving for. When the solution is found, the blockchain miners are offered cryptocurrency in exchange.
How Blockchain Works :
Different types of Blockchain :
What is a Smart Contract?
A smart contract is a self-enforcing agreement embedded in computer code managed by a blockchain. The code contains a set of rules under which the parties of that smart contract agree to interact with each other.
What languages can we use to build a smart contract ?
- Ruby etc...
What is Bitcoin?
The Blockchain is to Bitcoin, what the Internet is to Google.