What is Blockchain Technology: Everything You Need to Know
by The Blockchain Diary on 2018-10-05
Blockchain is a mathematically designed structure to store data in a way which is almost impossible to hack or fake it out. And the technology which is used to do so, is called Blockchain Technology. The wide range of use cases of Blockchain to store all kind of valuable data in almost each & every industrial sector made this topic extremely hot nowadays. It's difficult to explain Blockchain Technology without going in details, but here, I'll try to make it as simple as possible, I Promise!
How did it born?
On 1 st Nov, 2008, Satoshi Nakamoto, the mysterious creator of Bitcoin, wrote a message in the Cryptography Mailing List stating, "I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party." with the whitepaper link to a document with the title " Bitcoin: A Peer-to-Peer Electronic Cash System " describing a technology that many are now convinced will dethrone the traditional financial and banking system.
Then, on 9 th Jan, 2009, Satoshi started mining the first Bitcoins with GenesisBlock, and that's how the Age of Cryptocurrency started, and the technology that made it happen, which we now recognize with the word " Blockchain", did not come out of thin air. By combining Cryptography with Blockchain, Nakamoto solved the problem of double spending which was on the edge for decades to create digital cash. It also eliminates the need for central authority or third party to mediate electronic exchange of a currency.
The growing Bitcoin’s popularity attracted many developers to create other cryptocurrencies called "Altcoins" many a time, using Bitcoin's open-source code. Soon, technologists came to attention that these blockchains could be used in various applications besides money. In late 2013, 19-year-old developer, Vitalik Buterin proposed Ethereum Blockchain featuring smart contract functionalities via transaction-based state transitions. And, now we can create our own (institutional/personal) tokens/coins on top of the Ethereum-Blockchain using smart contracts and decentralized apps (DApps).
What does blockchain do?
Almost each & every cryptocurrency-blockchains consist of five stages in a block generation process:
- Transaction Signing by a user
- Transaction Broadcasting to the Network
- Block Creation by the Miners
- Block Broadcasting to the Network
- Validating and Adding this new Block by the Network-Nodes to the Blockchain
How secure is blockchain?
This and that, everything is correct, but is it really secure? Specifically stating, can blockchain offer trustless environment to record private and temper-proof blocks?
The short answer is no. 100% Pure and Perfect immutability does not exist, blockchain like any other web software or network, is theoretically and technically vulnerable to modify.
So, is it not any secure at all?
Again, the answer is no. As all of the nodes on a blockchain, are decentrally distributed, 51% of total mathematical computing power requires hundreds of billions dollars’ worth of hardware with energy (electricity) to run them within a very short space of time (e.g. Average Block Time for Bitcoin – 10 minutes, Ethereum – 14 seconds) to alter changes makes modification nearly impossible, which makes network 99.99% immutable and secure. So, It is till now, this has never happened secure.
Types of blockchains
- Public blockchains
A public blockchain has absolutely no access restrictions uses Proof of Stake or Proof of Work algorithm to secure the network. Some of the popular public blockchains are Bitcoin and Ethereum.
- Private blockchains
A private blockchain is also called "Permissioned" blockchain, as anyone can’t read/write or review/audit the source code data unless one has the permission(s)/right(s) from the network administrators to do so. Usually, single organization controls this type of blockchain for their personal use. Example of popular private blockchain is Ripple.
- Consortium blockchains
A consortium blockchain is also called "Semi-Decentralized" or "Federated" blockchain, as instead of a single organization controlling it, a number of organizations control the blockchain according to their nodes’ permission(s)/right(s).