What is Blockchain Technology? How it works?

Distributed blockchains (i.e. without a single repository) and decentralized digital ledgers. are tamper-proof and tamper-proof. At the most basic level, they allow users to record transactions in a shared ledger within that pool. As a result, no transaction can be modified once it has been published according to standard blockchain network functionality.

The blockchain concept was integrated with many other computing technologies and concepts in 2008 to create modern cryptocurrencies: cryptocurrencies protected by cryptographic processes rather than an authority. or central repository.The blockchain concept was integrated with many other computing technologies and concepts in 2008 to create modern cryptocurrencies: cryptocurrencies protected by cryptographic processes rather than an authority. or central repository.
Blockchain implementations are usually created with a specific goal or function in mind. Cryptocurrencies, smart contracts and distributed ledger systems for businesses are all examples of functionality.
Bitcoin is the first blockchain-based cryptocurrency , allowing users to share data publicly so that participants can independently verify the validity of a transaction. Cryptocurrencies are built on blockchain technology, named after the intensive use of cryptographic functions.
To digitally sign and secure transactions in the system, users use public and private keys . Users can solve puzzles using cryptographic hash functions in the hope of getting paid a fixed amount in blockchain networks based on crypto-currencies involved in mining.
The field of blockchain technology has seen a steady stream of progress, with new platforms being introduced regularly – the environment is constantly changing. In addition to cryptocurrencies, blockchain technology can be used to establish a permanent, public, and transparent ledger system for collecting sales data, tracking digital usage, and paying for content creators like musicians.
This article explains blockchain technology and provides an overview of how it works.
How does blockchain work?The fundamental goal of blockchain is to allow people – especially those who do not trust each other – to communicate important data in a secure, tamper-proof way.
Hashes, blocks, nodes, miners, wallets, digital signatures, and protocols are different key concepts in blockchain.
Hash function

Imagine that 10 people in a room decide to create a new currency. They must follow the cash flow to ensure the validity of the coins in their new currency ecosystem. One person - let's call him Bob - decided to record a list of all actions in a diary. However, another person - let's call him Jack - decided to steal the money. To hide this, he changed the entries in the log.

Then one day, Bob noticed that someone had tampered with his diary. He decided to change the format of his diary to prevent future tampering. He used a program called a hash function to turn the text into a set of numbers and letters, as shown in the table below.Then one day, Bob noticed that someone had tampered with his diary. He decided to change the format of his diary to prevent future tampering. He used a program called a hash function to turn the text into a set of numbers and letters, as shown in the table below.
This process exploits a secure hashing algorithm, or SHA, that turns letters into string literals. Bob can choose different types of SHAs, each with different complexity and serving different needs.

A hash function is a string of numbers and letters, generated by hash functions. A hash function is a mathematical function that converts a variable number of characters into a string with a fixed number of characters.A hash function is a string of numbers and letters, generated by hash functions. A hash function is a mathematical function that converts a variable number of characters into a string with a fixed number of characters.
Just a small change in a string produces a whole new hash. After each log entry, Bob inserts a hash. But then Jack decided to change the item again. He goes to the log, changes the record and generates a new hash.

Bob notices that someone has reviewed the diary. He decided to complicate the record of each transaction. After each record, he inserts a new hash generated from the last hash recorded. Therefore, each import depends on the previous one.

If Jack tries to change the record, he will have to change the hash in all previous entries. Jack, however, was a determined thief, so he spent the night counting all the hashes.If Jack tries to change the record, he will have to change the hash in all previous entries. Jack, however, was a determined thief, so he spent the night counting all the hashes.
Bob doesn't want to give up, so he adds another random number after each record. This number is called the “nonce”. The zeros have to be chosen in such a way that the generated hash ends in two zeros.

To create a profile with Bob's up-to-date input system, Jack will now have to spend hours determining the nonce for each line.To create a profile with Bob's up-to-date input system, Jack will now have to spend hours determining the nonce for each line.
It is difficult for even computers to detect Nonces, but the task is entirely possible, as miners compete to discover them as part of the blockchain mining process.
UnitBob's original spreadsheet of 5,000 transactions is called the origin block - the starting point for this blockchain. Acceptance of this coin was widespread, so transactions came quickly and often. Newly generated blocks, can also contain up to 5,000 transactions, and have a code that correlates with old blocks, making them inevitable.
Assume that this blockchain updates itself every 10 minutes with a new block. It does so automatically. There is no master or central computer that instructs the computer to do this.
As soon as the spreadsheet or the ledger or the registry is updated, it can no longer be changed. So it is not possible to fake it. You can only add new items to it. The registry is updated on all computers in the network at the same time. Changes to the blockchain require the consensus of a majority of network participants.
One potential risk to the blockchain is a “51% attack,” in which one party bypasses the majority of the blockchain’s hash rate, allowing them to then dictate to the network.
In general, a block contains a timestamp, a reference to the previous block, transactions, and computational problems that must be resolved before the block enters the blockchain. The distributed network of nodes must reach a consensus that makes it nearly impossible to cheat in the blockchain.
IntersectionBob has been logging this way for a while. However, as new transactions continued to occur, he quickly became burdened by the number of records, finding his current system unsustainable. So as soon as his diary hit 5,000 transactions, he turned it into a one-page spreadsheet. Mary checked the accuracy of all transactions.
Bob then gave his spreadsheet log to 3,000 different computers, each located in different parts of the globe. These computers are called nodes. Every time a transaction occurs, it must be approved by those nodes, each of which checks the validity of the transaction. Once every node has checked a transaction, essentially a kind of electronic voting occurs. Some nodes may think the transaction is valid, while others may consider it fraudulent.
Each node has a copy of the spreadsheet log. Each node checks the validity of each transaction. If the majority of nodes say that a transaction is valid, then the transaction will be written to a block.

Now, if Jack wants to change an entry in the spreadsheet log, all the other computers will have the original hash. They will not allow change to happen.Now, if Jack wants to change an entry in the spreadsheet log, all the other computers will have the original hash. They will not allow change to happen.
MinerMining is the process by which miners add new blocks to the chain. Each block in a blockchain has its own unique hash and hash function, but it also refers to the hash of the previous block in the chain, making it difficult to mine a block, especially on chains. great.
Miners use specialized software to solve the extremely difficult math problem of generating an acceptable hash using a nonce. Because the nonce is only 32 bits long and the hash is 256 bits long, there are about four billion nonce-hash combinations to mine before finding the right one.
Miners are deemed to have discovered the “golden nonce” when this happens and their blocks are added to the chain. Making a change to any previous block in the chain requires re-mining not only the affected block, but all subsequent blocks.
This is why manipulating blockchain technology is so difficult. Consider it “mathematically safe” because identifying gold nodes takes time and lots of computational resources. When a block is successfully mined, all nodes in the network acknowledge the change and the miner is compensated financially.
Wallets, digital signatures and protocolsContinuing with the same example, Bob gathers 10 people together (10 people originally gathered as part of the new currency). He needs to explain the digital currency and the new ledger system to them.
Jack confessed his guilt to the group and apologized. To prove his sincerity, he gave Ann and Mary their coins back.
With all that in place, Bob explains why this can never happen again. He decided to implement something called digital signatures to confirm every transaction. But first, he gave everyone a wallet.
What is a wallet?If you own digital currency, then you need a digital wallet or an online platform or exchange for storage.
A wallet is a string of numbers and letters such as: 18c177926650e5550973303c300e136f22673b74. This is an address that will appear in different blocks in the blockchain as transactions take place. No name or personally identifiable information is included – wallet only.
Public wallet addresses are strings of characters that certain assets can be sent to. The address of each specific wallet is generated from the public key.
Digital signaturesTo make a transaction, you need two things: the wallet is the address and the private key. The private key is a sequence of random numbers. However, unlike an address, the private key must be kept secret. A private key controls the funds held in its associated wallet.
When someone decides to send money to anyone else, they must use their private key to sign the message containing the transaction. The two-key system — the private key and the public key — is at the heart of encryption and cryptography, and its use has long predated the existence of blockchain. It was first proposed in the 1970s.
After the message is sent, it is broadcast to the blockchain network. The network of nodes then acts on the message to ensure that the transaction it contains is valid. If it validates, the transaction is placed in a block. After that, no information about it can be changed.
What is a cryptographic key?A cryptographic key is a string of numbers and letters. A cryptographic key is generated by a key generator or key generator. These keygens use very advanced math related to prime numbers to generate the keys. Such keys can be used to encrypt or decrypt information.
ProtocolsBlockchain technology consists of individual behavioral specifications, a large set of rules programmed into it. Those specifications are called protocols. Implementations of specific protocols essentially make up the blockchain – a secure, peer-to-peer, distributed database of information.
Blockchain protocols ensure that the network runs the way its creators intended, even though it is completely autonomous and not controlled by anyone.

Here are some examples of protocols implemented in the blockchain:Here are some examples of protocols implemented in the blockchain:
The input for any hashes must include the hash of the previous block.
The reward for successfully mining a block is halved after 210,000 blocks are mined. For Bitcoin ( BTC ), this is known as the halving. At 10 minutes per block, mining 210,000 blocks takes about four years; hence the Bitcoin halving event every four years.
To keep the time it takes to mine a block to around 10 minutes, the mining difficulty is recalculated every 2,016 blocks. Mining difficulty essentially balances the network with the number of miners. More miners means a more competitive atmosphere, making blocks harder to mine. Fewer miners means it is relatively easier to mine blocks, thus attracting miners to participate.

Blockchain technology: Pros and consBlockchain technology: Pros and consThe majority of blockchains are built as a decentralized database that acts as a distributed ledger. These blockchain ledgers track and store data in chronologically arranged blocks linked by cryptographic proofs.
The development of blockchain technology has brought many benefits across many areas of business, including increased security in trustless scenarios. However, the fact that it is decentralized has significant limitations. For example, blockchains have limited efficiency compared to conventional centralized databases and require more storage space.
The various pros and cons of blockchain include

What is decentralization in blockchain and why is it important?What is decentralization in blockchain and why is it important?Blockchains are essentially distributed databases. The database is blockchain and each node on the blockchain has access to the entire chain. There is no single button or calculator that modifies the information it contains. Every node can validate the records of the blockchain. All this is done without one or several intermediaries controlling everything.
It is architecturally decentralized and there is no point of failure that can bring down the blockchain, which makes it a vital component of the blockchain system. However, the nodes of a blockchain are logically centralized, since the entire blockchain is a distributed network that performs certain programmed actions.

Peer-to-peer transmission
In decentralized peer-to-peer (P2P) transport, communication always happens directly between peers rather than through a central node. Information about what is happening on the blockchain is stored on each node which is then passed on to adjacent nodes. In this way, the information propagates throughout the network.

Transparency in blockchain technologyTransparency in blockchain technologyAnyone examining the blockchain has the ability to see every transaction and its hash value. Someone using the blockchain can pretend to be if they want, or they can give their identity to others. All that is seen on the blockchain is a record of transactions between wallet addresses.
Once a transaction is recorded on the blockchain and the blockchain updates, it becomes impossible to change the record of this transaction. Why? That particular transaction record is linked to the record of every previous record, making it immutable. Blockchain records are permanent, they are ordered chronologically, and they are available to all other nodes.
It is almost impossible to turn off the network. Since many nodes exist and operate globally, it is not possible for one party to take over the entire network.
Forging a block is also nearly impossible because the validity of each block and in other words, its inclusion in the blockchain is determined by the electronic consensus of the nodes. There are thousands of these nodes, scattered all over the world. As a result, capturing the network would require a computer with a near-impossible amount of power.
However, using blockchain technology as a regular database will be very difficult. Can you store three gigabytes of files on the blockchain the same way you would using database platforms like Microsoft Access, FileMaker, or MySQL? This would not be a good idea. Most blockchains are not suitable for this by design or simply lack the required capacity.
Traditional online databases typically use a client-server network architecture. This means that users with access can change the entries stored in the database, but overall control remains with the administrator. When it comes to blockchain databases, each user is responsible for maintaining, calculating, and updating every new entry. Every single node must work together to ensure that they all come to the same conclusion.
The blockchain technology architecture also means that each node has to work independently and compare the results of its work with the rest of the network, so reaching a consensus can be very time-consuming. Because of this, blockchain networks have historically been considered slow when compared to traditional digital transaction technology. Advances have increased the speed of blockchain-related transactions in some cases, as seen in a number of crypto assets, projects, and solutions.
That said, there have been experiments in producing databases using blockchain technology. These platforms aim to use an enterprise-grade distributed database and build on it while adding three key attributes of blockchain: decentralization, immutability, and the ability to register and transfer assets .
How secure is blockchain technology?While blockchain is not immune to hacking, its decentralized nature provides it with a stronger line of security. A hacker or criminal would need control of more than half of the machines in a distributed ledger to alter it.
The largest and most well-known blockchain networks, such as Bitcoin and Ethereum ( ETH ), are open to everyone with a computer and an internet connection. Having more participants on a blockchain network tends to increase security rather than create security concerns. More participating nodes means more individuals are reviewing each other's work and reporting bad actors. That is one reason why, by contrast, “private blockchain networks” that require an invitation to join can be more vulnerable to attack and manipulation.
Furthermore, blockchain is beneficial in resisting “double spend” attacks in payments and remittances. Cryptocurrency attacks are a source of concern. A user will spend their crypto more than once in a double spend attack. That is a non-existent problem when dealing with cash.
If you spend $3 on a cup of coffee, you don't have $3 left to spend on anything else. However, when it comes to cryptocurrencies, it is likely that users will use the cryptocurrency many times before the network notices.
This is where blockchain can help. In a cryptocurrency's blockchain, the entire network must agree on the sequence of transactions, confirm the most recent transaction, and publish it publicly, which helps to maintain the security of the network.
Bitcoin vs. blockchainLet's understand how Bitcoin and blockchain are two different things

Where can blockchain technology be used?Where can blockchain technology be used?The final part of this article will discuss some of the applications of blockchain. Blockchain technology is especially ideal for what are known as “smart contracts”. So, what exactly is a smart contract?
Smart contracts define the rules and penalties around a particular agreement, similar to the functionality of a traditional contract. The big difference, however, is that smart contracts automatically enforce those obligations. Thanks to their encryption, smart contracts will meet specific criteria.
Decentralized FinanceDecentralized finance, or DeFi , is the use of blockchain technology that allows participants to access features similar to those common in the world of mainstream finance, except in a decentralized manner. . Using various DeFi solutions, participants can borrow and borrow funds – as well as access other opportunities – regulated on the blockchain away from the control of a centralized authority.
Tokens are not corrodedNon-usable tokens, or NFT , serve as an application of blockchain technology with enormous potential in a number of different use cases. Such tokens are uniquely verifiable and cannot be exchanged one for one with others for the same value. One potential use case for NFT is artwork authentication, with artworks tied to the NFT, being able to verify their authenticity and ownership.
Supply ChainApplying blockchain technology to the supply chain can provide the ability to trace ingredients, foods, ingredients and more back to the source to prove their origin, as well as provide other pertinent information. about any given supply chain.
Warranty claimHandling warranty claims can be expensive, time consuming and often difficult for claimants. It is possible to deploy smart contracts using blockchain technology, which will certainly make the process significantly easier.
Insurance claimWith smart contracts, a certain set of criteria for specific insurance-related situations can be established. In theory, with the implementation of blockchain technology, you could simply submit your insurance claim online and receive an automatic payment instantly – pending, of course, your claim responding. meet all required criteria.
Identity verificationWith blockchain and its decentralized aspect, online identity verification can be much faster and potentially more secure. Keeping identity data online in a central location may have become common practice in the past with the use of blockchain, meaning that computer hackers will no longer have centralized points of vulnerability.
Internet of Things (IoT)Linked together via the internet for interoperability purposes, IoT is an ecosystem of software-friendly items, such as vehicles and devices, that include certain specifications that help such interoperability.
Blockchain technology could play some role in the future of IoT, in part by providing potential methods for defending against hackers. Because blockchain is built for decentralized control, a security plan based on it must be scalable enough to include IoT scaling.
File storage and archiving

Google Drive, Dropbox and others have radically developed electronic document storage with the use of centralized methods. Centralized websites are attractive to hackers. Blockchain and its smart contracts provide ways to significantly mitigate this threat.Google Drive, Dropbox and others have radically developed electronic document storage with the use of centralized methods. Centralized websites are attractive to hackers. Blockchain and its smart contracts provide ways to significantly mitigate this threat.
Anti-crimeAs the technology gains more attention, blockchain and its smart contracts have the potential to help combat money-laundering tactics.
Blockchain provides a more comprehensive analysis of the system instead of just monitoring entry and exit points. Since blockchain is a decentralized network where each user or node is responsible for validating updates, it enhances the security of the network.
VotingVoting in elections, and similar processes, can be greatly improved with smart contracts and blockchain. Various related applications have emerged over time.
The future of blockchain technologyThe potential of blockchain technology is virtually limitless and recent advancements have brought us closer to a decentralized internet, trustless, transaction transparency and more.
As we move out of the pandemic and into the 'new normal', blockchains will likely be at the forefront of our progress in addressing these new societal challenges and redefining what it means to be. real wealth in the new digital world full of money bravery.
The future of blockchain technology looks bright and given that it has shown potential in almost every field, it seems like the best is yet to come.
Meanwhile, it will be fascinating to see where blockchain technology will go in the future, especially in terms of banking, remittances, decentralized markets, and other areas.