Thinking about blockchain, Ufff..... seems most complicated, no doubt it is but... The core concepts of blockchain are very simple and easy.
So let's start
What is Blockchain?
Blockchain is basically a distributed ledger that stores the electronic records of millions of transactions in a secure and efficient way. You can simply called it a database, and this database is designed in the form of tables for facilitating users in easy searching and in filtering information. The whole technology is Decentralized, which means no single authority. It's a chain or block that stores information and blocks that are Cryptographically linked with one another. A new block is added to the chain after a secure validation and undergoing a consensus decision. As the new blocks added to the chain the previous block becomes more and more difficult to be modified. This blockchain ledger is replicated thousands of times among the public network and everyone can access this network. Whenever a new transaction is made it is updated in all the replicated ledger, in this way everyone in the Blockchain can see the transaction, and this decrease the threats of hacking and fraud activities. This system made this technology more secure, and no one with the intentions of illegality can make transactions.
Types of Blockchain:
Generally, there are two types of Blockchain;
- Permissioned Blockchain
- Permissionless Blockchain
Permissioned Blockchain:
Permissioned Blockchain also called Private blockchain usually used by organizations and by groups of people for private use. The public cannot access Permissioned Blockchain. In this blockchain network publishing blocks are authorized by someone, who is central authority and in a private Blockchain network only trusted peoples are allowed to participate.
Permissionless Blockchain:
Permissionless Blockchain also called Public Blockchain is publically available and everyone can participate in it. This is a truly decentralized network having no authority. In this network everyone can read and write but add new blocks is not easy.
Components of Blockchain:
Blockchain is a wide term some most important components of blockchain are;
- Cryptography Hash Function
- Asymmetric - Key Cryptography
- Symmetric - Key Cryptography
Cryptography Hash Function:
Cryptography Hash Function is basically an equation that is used for the validation of data. Along with this, it has other multiple functions, it is used for the linking of blocks in the chain also used to produce unique and defined output or digest from the input of any size. The major of Cryptography Hash Function is the security (authentication of data).
Asymmetric - Key Cryptography:
Asymmetric - Key Cryptography is a Cryptographic system that uses a pair of keys, a public key and a private key, the encryption, and decryption of data. This creates an environment of trust and authenticity among the users who don't know each other but making transactions by providing multiple different mechanisms that verify the authenticity and integrity of the transaction.
Symmetric - Key Cryptography:
This Cryptographic system uses only one key that is called a single secret key for both encryption and decryption of data and in this system, the users may have a trust relationship with one another.
Consensus Model:
In the system of blockchain, the major question is "Who'll add the next block?", because blockchain is open to the public and multiple users are trying to add a new block at the same time, this can create a Cloud of new blocks and can destroy the whole system also it can cause serious security issues. This problem is solved with the help of Consensus models.
Consensus models basically define the security of the blockchain maintaining the whole system and also making consistency among the shared states of blockchain.
There are many consensus models, some most useful and famous are here;
- Proof of Work (POW)
- Proof of Stake (POS)
Proof Of Work (POW):
This model creates a barrier in the way of add new blocks. In this model, users have to solve mathematical problems and difficult puzzles, and the system is open to anyone. This needs a lot of energy and computational work, also 51% of attacks can destroy the network in this model. This is mostly used for permissionless Blockchain.
Proof of Stake (POS):
In this model users first have to invest some stakes for the creation of a new block, and the user with higher investment wins the chance to create a new block. This is open to everyone anyone can invest and can be able to add a new block.
There are many other consensus models that are being used in blockchain like Proof of authority, Delegated POS, Around Robbin, etc and each model provides a different challenge for users to add a new block in the chain.
This is a quick overview of Blockchain, if you find this article useful and informative, kindly upvote and rehive it.