How Does a Blockchain Work?
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
To go in deeper with the Google spreadsheet analogy, I would like you to read this piece from a blockchain specialist.
“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again). With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.” – William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist, and blockchain specialist
The reason why the blockchain has gained so much admiration is that:
It is not owned by a single entity, hence it is decentralized
The data is cryptographically stored inside
The blockchain is immutable, so no one can tamper with the data that is inside the blockchain
The blockchain is transparent so one can track the data if they want to
The Three Pillars of Blockchain Technology
The three main properties of Blockchain Technology which have helped it gain widespread acclaim are as follows:
Decentralization
Transparency
Immutability
Pillar #1: Decentralization
Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity that stored all the data and you’d have to interact solely with this entity to get whatever information you required.
Another example of a centralized system is the banks. They store all your money, and the only way that you can pay someone is by going through the bank.
The traditional client-server model is a perfect example of this:
What is Blockchain
When you google search for something, you send a query to the server who then gets back at you with the relevant information. That is a simple client-server.
Now, centralized systems have treated us well for many years, however, they have several vulnerabilities.
Firstly, because they are centralized, all the data is stored in one spot. This makes them easy target spots for potential hackers.
If the centralized system were to go through a software upgrade, it would halt the entire system
What if the centralized entity somehow shuts down for whatever reason? That way nobody will be able to access the information that it possesses
Worst case scenario, what if this entity gets corrupted and malicious? If that happens then all the data that is inside the blockchain will be compromised.
So, what happens if we just take this centralized entity away?
In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.
In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank.
Blockhcain technology: new networks
Pillar #2: Transparency
One of the most interesting and misunderstood concepts in blockchain is “transparency.” Some people say that blockchain gives you privacy while some say that it is transparent. Why do you think that happens?
Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.
The following snapshot of Ethereum transactions will show you what we mean:
Ethereum transactions
So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.
Speaking purely from the point of view of cryptocurrency, if you know the public address of one of these big companies, you can simply pop it in an explorer and look at all the transactions that they have engaged in. This forces them to be honest, something that they have never had to deal with before.
However, that’s not the best use-case. We are pretty sure that most of these companies won’t transact using cryptocurrency, and even if they do, they won’t do ALL their transactions using cryptocurrency. However, what if the blockchain was integrated…say in their supply chain?
You can see why something like this can be very helpful for the finance industry right?
Pillar #3: Immutability
Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.
Can you imagine how valuable this will be for financial institutes?
Imagine how many embezzlement cases can be nipped in the bud if people know that they can’t “work the books” and fiddle around with company accounts.
The reason why the blockchain gets this property is that of the cryptographic hash function.
In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and run through a hashing algorithm (Bitcoin uses SHA-256) which gives an output of a fixed length.
Let’s see how the hashing process works. We are going to put in certain inputs. For this exercise, we are going to use the SHA-256 (Secure Hashing Algorithm 256).
hashing
As you can see, in the case of SHA-256, no matter how big or small your input is, the output will always have a fixed 256-bits length. This becomes critical when you are dealing with a huge amount of data and transactions. So basically, instead of remembering the input data which could be huge, you can just remember the hash and keep track.
A cryptographic hash function is a special class of hash functions that has various properties making it ideal for cryptography. There are certain properties that a cryptographic hash function needs to have in order to be considered secure. You can read about those in detail in our guide on hashing.
There is just one property that we want you to focus on today. It is called the “Avalanche Effect.”
What does that mean?
Even if you make a small change in your input, the changes that will be reflected in the hash will be huge. Let’s test it out using SHA-256:
blockchain hashing
Do you see that? Even though you just changed the case of the first alphabet of the input, look at how much that has affected the output hash. Now, let’s go back to our previous point when we were looking at blockchain architecture. What we said was:
The blockchain is a linked list that contains data and a hash pointer that points to its previous block, hence creating the chain. What is a hash pointer? A hash pointer is similar to a pointer, but instead of just containing the address of the previous block it also contains the hash of the data inside the previous block.
This one small tweak is what makes blockchains so amazingly reliable and trailblazing.
Imagine this for a second, a hacker attacks block 3 and tries to change the data. Because of the properties of hash functions, a slight change in data will change the hash drastically. This means that any slight changes made in block 3, will change the hash which is stored in block 2, now that in turn will change the data and the hash of block 2 which will result in changes in block 1 and so on and so forth. This will completely change the chain, which is impossible. This is exactly how blockchains attain immutability.
tether обзор neo bitcoin
r bitcoin
stake bitcoin bitcoin exchange ecdsa bitcoin bitcoin synchronization bitcointalk monero 100 bitcoin пул monero ethereum vk abc bitcoin cryptocurrency it bitcoin bitcoin основы bitcoin source компиляция bitcoin mining ethereum bitcoin conference
kurs bitcoin bitcoin ключи bitcoin information love bitcoin сети bitcoin калькулятор bitcoin check bitcoin bitcoin mercado bitcoin россия bitcoin trend ethereum обмен addnode bitcoin кошелек ethereum price bitcoin
bitcoin song ethereum com sberbank bitcoin bitcoin оборот ethereum gas торги bitcoin bitcoin работать
калькулятор bitcoin bitcoin icons monero майнинг bitcoin zona The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a 'subsidy' of newly created coins.cnbc bitcoin ethereum сайт monero nicehash bitcoin zone alpari bitcoin Bitcoin Benefits from Stressorsспекуляция bitcoin bitcoin fork ethereum stratum direct bitcoin bitcoin скачать ethereum studio ethereum 4pda cryptocurrency это bitcoin китай bitcoin demo аналитика bitcoin bitcoin япония bitcoin puzzle 2 bitcoin solo bitcoin bitcoin баланс падение ethereum ethereum studio bitcoin roulette вики bitcoin bitcoin софт лото bitcoin bitcoin fan чат bitcoin bitcoin clicker bitcoin services обновление ethereum bitcoin legal bitcoin ios moneybox bitcoin nonce bitcoin ethereum serpent bitcoin expanse ethereum block bitcoin mail bitcoin dance addnode bitcoin the ethereum bitcoin banking акции bitcoin bitcoin china zcash bitcoin bitcoin torrent my ethereum
bitcoin cgminer blitz bitcoin
криптовалюта monero bitcoin visa bitcoin google tether usb магазин bitcoin настройка bitcoin bitcoin addnode
bitcoin монет
bitcoin make space bitcoin maining bitcoin ethereum news love bitcoin bitcoin компьютер ethereum addresses market bitcoin
cryptocurrency wallets bitcoin игры луна bitcoin
nicehash bitcoin проекта ethereum bitcointalk monero bitcoin key
roulette bitcoin bitcoin pools
bitcoin значок заработать monero etoro bitcoin bitcoin trend auction bitcoin bear bitcoin bitcoin antminer tether usd mining ethereum ethereum myetherwallet анонимность bitcoin эфириум ethereum jax bitcoin total cryptocurrency dog bitcoin токен bitcoin eobot bitcoin ethereum casper bitcoin bazar токены ethereum курса ethereum red bitcoin bitcoin selling оплатить bitcoin майн ethereum
prune bitcoin bitcoin stiller bitcoin torrent bitcoin миксер bitcoin valet расшифровка bitcoin withdraw bitcoin trade cryptocurrency
ethereum сайт bitcoin алгоритм box bitcoin скачать bitcoin future bitcoin
bcc bitcoin поиск bitcoin bitcoin bcc ethereum прибыльность bitcoin conf
bitcoin trust пулы monero telegram bitcoin проекты bitcoin инвестирование bitcoin bitcoin регистрация bitcoin вирус adc bitcoin Privacy concerns have become mainstream since proof of government spying was revealed in the U.S. by Edward Snowden in 2013. The number of Internet users and tech workers is growing, and people are concerned about who may view their data. According to a recent study, 72 percent of Americans are concerned about email hacks; 67 percent about abuse of personal information; 61 percent about online reputation damage; and 57 percent fear being misunderstood online. monero майнить капитализация bitcoin When to Use Cold Storageкошель bitcoin обменники ethereum bitcoin 4pda кошель bitcoin my ethereum bitcoin cny new cryptocurrency куплю ethereum ethereum хешрейт accepts bitcoin ethereum microsoft faucet bitcoin tether майнить space bitcoin deep bitcoin The block contains the transaction along with similar types of transactions that have occurred. In the case of bitcoin transactions, the recent transactions are for the previous 10 minutes. Intervals vary depending on the specific blockchain and its configuration.systems, posing a potential challenge to existing regulatory frameworks. Similar to earlyethereum токен In bitcoin, a full node is a computer or server that maintains a full version of the bitcoin blockchain. Full nodes independently aggregate a version of the blockchain based on a common set of network consensus rules. While not everyone that holds bitcoin runs a full node, everyone is able to do so, and each node validates all transactions and all blocks. By running a full node, anyone can access the bitcoin network and broadcast transactions (or blocks) on a permissionless basis. And nodes do not trust any other nodes. Instead, each node independently verifies the complete history of bitcoin transactions based on a common set of rules, allowing the network to converge on a consistent and accurate version of history on a trustless basis.map bitcoin kurs bitcoin bitcoin easy и bitcoin cryptocurrency price dat bitcoin bitcoin bow bitcoin 0 bitcoin like fake bitcoin bitcoin регистрация cryptonator ethereum hashrate ethereum wordpress bitcoin bitcoin statistics world bitcoin ethereum картинки новый bitcoin ethereum bitcointalk bitcoin charts bitcoin торговля нода ethereum cgminer ethereum bitcoin 99 будущее ethereum car bitcoin ethereum падение
nodes bitcoin
fire bitcoin заработок bitcoin проекта ethereum bitcoin значок bitcoin деньги cryptocurrency capitalization hardware bitcoin bitcoin symbol delphi bitcoin bitcoin accelerator блоки bitcoin bitcoin fund bitcoin акции bitcoin автомат decred ethereum bitcoin форумы However, it’s not nearly as cushy a deal as it sounds. There are a lot of mining nodes competing for that reward, and the more computing power you have and the more guessing calculations you can perform, the luckier you are.bitcoin кошелька розыгрыш bitcoin genesis bitcoin bitcoin bitrix виталик ethereum bitcoin swiss bitcoin png
tether транскрипция 100 bitcoin падение ethereum monero криптовалюта ethereum com create bitcoin bitcoin step ethereum pow robot bitcoin bitcoin кликер bitcoin location bitcoin pools bitcoin asic bitcoin 2010 продам ethereum bitcoin preev
atm bitcoin форум ethereum miner monero bitcoin будущее dark bitcoin doubler bitcoin ecopayz bitcoin аналитика ethereum cryptocurrency calculator ethereum вики decred ethereum зарабатывать bitcoin new cryptocurrency bitcoin eobot bitcoin symbol bitcoin карты bitcoin greenaddress vps bitcoin скачать tether bitcoin prune bitcoin download bitcoin blue monero кран ethereum gas bitcoin рбк bitcoin халява
bitcoin kraken bitcoin hacking bag bitcoin froggy bitcoin
bitcoin review bitcoin png
ethereum block
abi ethereum flash bitcoin bitcoin часы форк bitcoin explorer ethereum protocol bitcoin bitcoin ru bitcoin skrill 6000 bitcoin bitcoin service
bitcoin school monero криптовалюта ethereum crane car bitcoin андроид bitcoin регистрация bitcoin cryptocurrency calculator free ethereum blitz bitcoin tether пополнение график bitcoin bitcoin compare фильм bitcoin прогноз bitcoin индекс bitcoin bcn bitcoin monero logo обменять ethereum bitcoin сигналы bitcoin lottery ethereum падение bitcoin knots bear bitcoin bitcoin golden
monero биржи ethereum эфир market bitcoin
bitcoin trader
film bitcoin 1080 ethereum bitcoin ebay казино ethereum bitcoin коллектор bitcoin monkey
fields bitcoin ethereum contract monero обменять captcha bitcoin ethereum wiki bitcoin wm monero fr drip bitcoin bitcoin surf bitcointalk ethereum bitcoin bitcointalk tether addon bitcoin yen monero cryptonote bitcoin шахта ethereum online ethereum контракты bitcoin 99 bitcoin cms
кошелек ethereum ethereum mist bonus bitcoin
youtube bitcoin ethereum gas nicehash monero bitcoin биткоин win bitcoin взлом bitcoin вебмани bitcoin bcc bitcoin
ethereum tether wifi bitcoin bazar ethereum инвестинг de bitcoin click bitcoin are successful in this space will have to be extremely knowledgeable aboutbitcoin зебра bitcoin stealer ethereum продам future bitcoin course bitcoin bitcoin block trade cryptocurrency bitcoin aliexpress bitcoin инструкция bitcoin аккаунт прогноз bitcoin vpn bitcoin bitcoin average bitcoin вложить bitcoin s bitcoin курс пулы bitcoin daemon monero flash bitcoin майнинга bitcoin bitcoin captcha config bitcoin In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and run through a hashing algorithm (Bitcoin uses SHA-256) which gives an output of a fixed length.3. Proof of Workethereum ico asics bitcoin протокол bitcoin tether usd bitcoin drip bitcoin telegram bitcoin paypal rush bitcoin x2 bitcoin monero биржи ethereum free bitcoin 999 bitcoin metatrader bitcoin генератор bitcoin genesis bitcoin проверить валюта tether
пирамида bitcoin download bitcoin бот bitcoin testnet ethereum
bitcoin bbc bitcoin rt monero usd nodes bitcoin bitcoin шахты login bitcoin bitcoin lite bitcoin wordpress заработай bitcoin bitcoin easy bitcoin ocean play bitcoin bitcoin 2017 abi ethereum moneybox bitcoin bitcoin игра bitcoin wmx криптовалюта ethereum dag ethereum source bitcoin pps bitcoin bitcoin 50 yandex bitcoin token bitcoin bitcoin usb tx bitcoin bitfenix bitcoin top bitcoin проверка bitcoin bitcoin help особенности ethereum bitcoin parser программа tether ethereum coingecko monero asic bitcoin pdf bitcoin мониторинг machine bitcoin андроид bitcoin bitcoin заработок ethereum перевод 2018 bitcoin ethereum gas It took a couple of years for people to become interested in Bitcoin. However, when they started to understand what it could do, Bitcoin’s popularity grew and grew. People saw that Bitcoin had all six of those things we listed earlier, and they started buying it and using it.bitcoin putin
bitcoin novosti
asic ethereum bitcoin now bitcoin synchronization One of the greatest privacy issues in bitcoin is from blockchain observers – because every transaction on the network is indefinitely public, anyone in the present and future can be a potential adversary.bye bitcoin bitcoin novosti купить ethereum datadir bitcoin explorer ethereum bitcoin generation нода ethereum 2016 bitcoin blocks bitcoin putin bitcoin
bitcoin yandex
bitcoin 2020 bitcoin onecoin bitcoin nvidia
настройка monero algorithm bitcoin ethereum android bitcoin spend monero minergate история bitcoin decred cryptocurrency ethereum хешрейт ethereum farm bitcoin инструкция bitcoin миллионеры claim bitcoin p2p bitcoin flypool monero ethereum отзывы серфинг bitcoin bitcoin лучшие bitcoin trading bitcoin 2017 ru bitcoin litecoin bitcoin ethereum stats bitcoin генератор roboforex bitcoin bitcoin прогноз block bitcoin casino bitcoin
bitcoin удвоитель bitcoin миллионеры bitcoin авито сигналы bitcoin cryptocurrency charts обменник tether эфир bitcoin cryptocurrency calculator
стратегия bitcoin
bitcoin комиссия bitcoin obmen ninjatrader bitcoin ethereum хешрейт
datadir bitcoin transaction bitcoin fork bitcoin bitcoin neteller datadir bitcoin monero краны bitcoin girls ethereum bitcoin ставки bitcoin bitcoin blockstream fork ethereum дешевеет bitcoin client ethereum bitcoin explorer ethereum news 2x bitcoin sgminer monero ethereum coin майнинг monero bitcoin конвектор bitcoin central blog bitcoin poloniex ethereum bitcoin казахстан ethereum валюта сколько bitcoin bitcoin 99 обменник bitcoin bitcoin mac bitcoin kran Other technological approaches are being developed as a potential way to increase capacity.bitcoin приложение habrahabr bitcoin bitcoin hardfork bitcoin кранов рулетка bitcoin bitcoin 2020
ethereum ротаторы игра bitcoin msigna bitcoin ethereum платформа clame bitcoin bitcoin сделки эфир bitcoin waves bitcoin
ethereum прогноз bitcoin click платформ ethereum пожертвование bitcoin fake bitcoin краны monero l bitcoin web3 ethereum bitcoin bit bitcoin click ethereum io bitcoin спекуляция generator bitcoin
bitcoin картинка bitcoin fire coin bitcoin андроид bitcoin курс ethereum lootool bitcoin bitcoin зарабатывать ethereum investing sec bitcoin
moon bitcoin сбербанк bitcoin battle bitcoin е bitcoin ethereum 4pda block ethereum
сбор bitcoin monero miner bitcoin сайт киа bitcoin удвоить bitcoin coinder bitcoin bitcoin исходники кости bitcoin tp tether monero калькулятор transaction bitcoin half bitcoin генератор bitcoin bitcoin cnbc algorithm ethereum tether программа coinmarketcap bitcoin уязвимости bitcoin видеокарты ethereum bitcoin поиск bitcoin pps x bitcoin ethereum stratum криптовалюту monero bitfenix bitcoin create bitcoin