A REUTERS VISUAL GUIDE
Blockchain explained
By MARYANNE MURRAY
Published June 15, 2018
A blockchain is a database that is shared across a network of computers. Once a record has been added to the chain it is very difficult to change. To ensure all the copies of the database are the same, the network makes constant checks. Blockchains have been used to underpin cyber-currencies like bitcoin, but many other possible uses are emerging.
TOP
A database
Records are bundled together into blocks and added to the chain one after another. The basic parts:
THE RECORD
Can be any information, a deal for example
THE BLOCK
A bundle of records
THE CHAIN
All the blocks linked together
Here’s how a deal gets included in a blockchain:
STEP ONE
A trade is recorded. For example, let’s say Mr Pink is selling two of his coins to Mr Green for $100. The record lists the details, including a digital signature from each party.
STEP TWO
The record is checked by the network. The computers in the network, called 'nodes', check the details of the trade to make sure it is valid.
STEP THREE
The records that the network accepted are added to a block. Each block contains a unique code called a hash. It also contains the hash of the previous block in the chain.
STEP FOUR
The block is added to the blockchain. The hash codes connect the blocks together in a specific order.
Difficult to change
Hash codes keep records safe.
A hash code is created by a math function that takes digital information and generates a string of letters and numbers from it. Let’s take a closer look at two important characteristics of hash codes:
First, no matter what the size of the original file, a hash function will always generate a code of the same length. For example, the first tweet from Jack Dorsey was much shorter than “War and Peace” by Leo Tolstoy, but they would yield hashes of the same length.
SAMPLE (32-BYTE) HASH LENGTH OF @JACK'S TWEET:
c6f7257abff7b43959cd728f06c0c74230391640115cc3ea86a7e54be62aecc4
SAMPLE (32-BYTE) HASH LENGTH OF 'WAR & PEACE':
a948904f2f0f479b8f8197694b30184b0d2ed1c1cd2a1ec0fb85d299a192a447
Second, any change to the original input will generate a new hash. So if someone decided to delete just one comma from Tolstoy's 587,287-word masterpiece, it would show up, because the hash would change.