If you've been watching finance, trading, or cryptocurrencies over the last decade, you may have used the word "blockchain." The infrastructure behind cryptocurrencies like Bitcoin, Ethereum, and others. Blockchain started in the late 1990s and today empowers healthcare, finance, and much more!
Blockchain is the genius and innovative technology behind all cryptocurrencies. Bitcoin is the brainchild of an individual or a group of people known by the alias Satoshi Nakamoto. Bitcoin launched in 2008, and it's grown into the most prominent cryptocurrency today!
Bitcoin is becoming more well-known, but people often ask, "What is Blockchain?"
BLOCKCHAIN-WHAT DOES IT MEANS?
At first, Blockchain seems to be complex and challenging, but its basic principle is rather simplistic. A blockchain is a type of database type and a compilation of records stored digitally on a file server.
Blockchain is a decentralized network vs. the traditional centralized network. Your bank is a centralized network where we move our money in and out. The bank keeps track of your transactions on a "ledger" or spreadsheet. The ledger holds the debits and credits and verifies your transactions.
Blockchain moves the ledger onto the peer-to-peer network. When a credit or debit transaction occurs, the records synchronize to the Blockchain decentralized network. So thousands of ledgers across the Blockchain network verify and secure the transactions.
Blockchain removes the need to have a centralized financial institution.
BITCOIN STORAGE STRUCTURE:
A significant difference between a standard database ledger and a blockchain ledger is how the information is processed. A blockchain gathers data in blocks, also called groups of information sets. Blocks have defined storage capabilities and are linked to the previously loaded block, creating a chain of records known as the Blockchain.
All details that group the recently introduced block are stored into a newly established block when incorporated into the loaded chain.
The database processes its data into tables like spreadsheets. The Blockchain constructs its data into clumps or blocks tied next to each other. Meaning all blockchains are database management systems, but not all databases are blockchains. This structure also provides a timeline for data validation in a decentralized manner. When the block is recorded, it is written across the network and becomes a component of the timeline. A timestamp tag is assigned to each block in the chain when entered into the system.
Bitcoin requires a network of computing devices to store the Blockchain like a database. For Bitcoin, this Blockchain is just a type of data structure that holds each bitcoin transaction ever made. In the case of any Blockchain, not all of these computing devices are centralized in one location. A "centralized network" is a group of computer programs controlled by one person or organization.
An example is an organization that owns a data center of thousands of computing devices with records containing all the relevant data on its customer's account. The organization has a storage facility hosting these computing devices under one roof. It has total ownership over all of these computers and programs.
Bitcoin also uses millions of devices to store its information. Each device or group of computers holding its Blockchain is located in different locations worldwide. They are controlled by various individuals and organizations. These devices are referred to as nodes that make up the Bitcoin system.
The bitcoin blockchain is using a "decentralized system." In a valid blockchain, each node has a complete history of the information that's been collected since its beginning. With Bitcoin, the data content is the entire history of all Bitcoin transactions. If a node has a discrepancy in its information, it will use dozens of several other nodes as a point of comparison to correct itself. No other system on the Blockchain can modify the data gathered inside the system without verification. The history of transactions across each of the blocks makes the Blockchain irreversible.
If one node tries to change or hack the Bitcoin's database table, all other nodes can cross-reference and quickly locate the node with the wrong information. This creates an exact sequence of events, and for Bitcoin, this data is a record of transactions.
The Blockchain is not limited to Bitcoin and cryptocurrency. I can contain various information, such as legal contracts, smart contracts, state IDs, or and organizations' product inventory.
TRANSPARENCY OF THE BLOCKCHAIN DECENTRALIZED NETWORK:
In a "decentralized network," you can see all transactions by ID but not your name. Either by using an individual node or by using blockchain portals. This enables everyone to see transactions happening live. Each node has its duplicate of the chain that is modified as new blocks are validated and inserted. If you need to, you would be able to monitor Bitcoin everywhere it goes.
In the early days of Bitcoin, some transactions were breached, and people lost everything. Even though the hacker might have been completely anonymous, the Bitcoins they harvested are detectable. If the stolen bitcoins were ever transferred or invested, others would find out.
IS BLOCKCHAIN SAFE AND PROTECTED?
Blockchain computing is highly encrypted, and developers are confident in a variety of ways. New blocks are created sequentially and chronologically. Every time they are placed to the "end" of the Blockchain. If you look at Bitcoin's Blockchain, you'll find that every unit has a chain style called "height."
Once a block was attached to the end of the Blockchain, it is pretty complicated to modify the block's data until the majority has agreed. This is due to each node receiving its very own hash, together with the block's hash before it, including the timestamp. Hash codes are created by a sequence of calculations that convert electronic data into a series of numbers and letters. If the data changes, the hash code changes too.
This is where the strength of the decentralized system lies.
Imagine an intruder tries to change the Blockchain to steal Bitcoin from others. If the intruder were to change their single copy of the data block, it would become out of sync with everyone else's version. Then the Blockchain will cross-reference their versions of one another. They will find this one replica invalid and toss out the hacker's copy of the Blockchain. The Bitcoin is safe!
For such a breach to occur, the hacker will need to alter and change 51 percent of the Blockchain versions concurrently. Their copy would become a majority replica and the agreed-upon chain. An invasion like this would take a large amount of money and effort. It would require rewriting all the blocks to have various serial numbers, timestamps, and hash keys match up.
Due to the growth of the Bitcoin infrastructure and how quickly it is developing. The expense of completing such a hack is very unlikely. It would be so costly, and it would make it pointless. Making such a move would not go unknown since users would see these dramatic improvements to the Blockchain. The members would move to a new iteration of the Blockchain that was not compromised.
This will cause the value of Bitcoin to fall, making the attack not worth it. The Blockchain and Cryptocurrencies are structured to participate in the platform is much more financially valuable than trying to breach it.
Blockchain was first suggested as a research experiment in 1991 and has safely established itself today. Blockchain has had its great deal of positive and negative media attention over the past two decades! Organizations worldwide remaking assumptions on what it is worthy of and where it will be going in the future.
With many practical uses for decentralized Blockchain software already being applied and studied, Blockchain is gradually building a reputation for itself!
Blockchain is a "game-changing" technology that's already changed the world. We know it most for Bitcoin and cryptocurrencies, but soon you see more. Healthcare and many other industries hope to profit in a more reliable, effective, safe, and inexpensive with fewer intermediaries.