What Is A Blockchain? - Blockchain technology is changing industries throughout the world. This brings organizations, governments, financial institutions and payment platforms to the new digital era. It revolutionized everything around us - but many people don't know what a blockchain is or how blockchain technology works.
Today, we are explaining the core things you need to know about blockchain and blockchain technology. This guide will continue to grow but we want to keep it as short as possible, but for anyone to learn anything from beginners to ninjas, the context must be owned. If we can say as few words as possible, it won't exist at all and only use Satoshi's words:
- Nodes collect new transactions into blocks, haveh them into hash trees,
- and scan through nonce values to have satisfactory proof-of-work hashes
- Requirements. When they broke the proof of work, they broadcast the block
- for everyone and blocks added to the block chain. First transaction
- on the block is a special coin that creates new coins owned by the maker
- from the block.
So if only that is needed to understand (and finally you will know what the datachunk block chain actually is) what is the ledger technology distributed by blockchain, we will end it here, but don't really enjoy our 2018 what is the blockchain guide for each and all.
What is a Blockchain?
The Blockchain is an open ledger that can efficiently record transactions between two parties in a permanent, verifiable manner. Blockchain is a technology in the heart of bitcoin and other cryptocurrency. Without blockchain, cryptocurrency will not exist in their modern form.
Why is Blockchain Technology Very Important?
Contracts, transactions, and records have long played an important role in our modern world. Our legal and political systems rely on contracts and transactions for almost every core function.
Contracts, transactions, and records are used to protect assets or set organizational boundaries. They are used to verify identity or chronic events.
Every day, the world around us is governed by contracts and transactions. However, the way we record these contracts and transactions has stalled in the past. These important tools do not follow the digital revolution.
As explained by one of the articles in the Harvard Business Review, "They are like rush hour jams trapping Formula 1 racing cars." The article further explained that, "In the digital world, the way we regulate and maintain administrative control must change."
That is why many companies are trying to apply blockchain technology to various industries - the potential for profits is enormous.
Blockchain Can Eliminate the Need for Lawyers, Brokers & Bankers
Think about the importance of this blockchain: most of the world's infrastructure consists of intermediaries - or intermediaries.
We are not just talking about intermediaries such as businesses that take profits to sell goods or services.
We talk about lawyers acting as intermediaries between the public and the law, or bankers who act as intermediaries between individuals and their access to creditors. It is possible that lawyers, brokers and bankers can be obsolete by blockchain technology in the future.
Instead of needing intermediaries, blockchain technology will allow individuals, organizations, machines, and algorithms to interact freely with each other.
We've seen this with blockchain and bitcoin. When two people want to exchange bitcoin or other cryptocurrency, they don't go to the bank and pay a large transaction fee. They complete peer-to-peer transactions through the blockchain.
How does the Blockchain work?
Blockchain is a distributed ledger that embeds contracts and transactions in digital code.
This digital code - and record of this transaction - is stored in a shared database that is transparent. This database is decentralized, which means it is held by people ("nodes") throughout the world. This decentralized system protects the blockchain from tampering, deletion, and revision.
Using blockchain, everything we do has digital records. That means every process, transaction, task, and payment has a digital record. Each record can also be traced back to the individual: it has a signature that can be identified, validated, stored, and shared.
In the end, this allows organizations or individuals to do business in a more efficient way: with a blockchain, we have a way of manipulating, verifying, and permanently recording transactions between two parties.
Can Blockchain Fail to Revolutionize the World?
There are many sensations in the world of blockchain now. Blockchain startups are popping up every day. Many compare it to the internet revolution in the early 90s, when companies rushed to take advantage of the power of this dramatic new discovery.
However, some - like the HBR.org article mentioned above - doubt the blockchain's ability to revolutionize the world. It's far from certain things.
Some show security problems outside the blockchain - like Mt. Gox hack, when the user loses bitcoin worth $ 450 million USD.
Others show the history of technological innovation. With most major technological changes, there needs to be a change in technology, government, organizations, and society that is substantial to pave the way for that technology.
With changes as important as blockchain technology, countless modern institutions must fall before the blockchain can be fully implemented.
As explained by the Harvard Business Review, "It would be a mistake to hurry towards blockchain innovation without understanding how it will happen."
Technology Behind the Blockchain
As we mentioned above, the blockchain is a distributed digital book. This is a peer-to-peer network located on the internet.
Decentralization
One of the main features of this technology is that it is a distributed database. This is decentralized. The database is in many copies on several computers. Each copy is identical. Computers - or nodes - all form peer-to-per networks, which means there is no centralized database or server.
At present, organizations maintain databases and centralized servers where all their data is stored. This makes this server a profitable target for hackers. The Blockchain decentralizes data and makes it public but encrypted. Many people believe this makes it resistant to damage.
When transactions occur on the blockchain, data about the new transaction must be sent to all computers - nodes - on the network. This means the blockchain remains in sync as a "world ledger". Instead of having several conflicting ledgers, there is one version of "truth".
Digital Signature
Another key feature of the blockchain is that every transaction on the blockchain is digitally signed, using public key cryptography. Public key cryptography involves the use of two public and private keys. The public key is used to sign and encrypt messages sent, and anyone can see this key.
However, only the recipient has a private key, which means only the recipient can decrypt the transaction. Public keys are used for more than just encrypting messages: they are also used to authenticate identity.
Transaction Block
The reason is called the blockchain because it's really a block chain.
Each block on the blockchain consists of a list of transactions. Each block also contains a block header. The header contains three sets of metadata, including structured data about transactions in blocks; timestamp and proof-of-work data algorithm; and references to the parent block, or previous block, using hashes.
Using these three sets of metadata, each block is chained together - because of that the word blockchain.
Mining
You may have heard about bitcoin mining. This is very different from traditional mining, to say the least!
Mining is the process by which new blocks are created on the blockchain. In Bitcoin, new blocks are mined every 10 minutes. Some cryptocurrency has faster block transaction times, while others have slower times. Basically, this means that a Bitcoin transaction takes a maximum of 10 minutes to process.
Mining validates every new transaction on the blockchain. To do that, the miner (who is a computer or processor) solves unique and difficult mathematical puzzles. This puzzle requires enormous computing power.
Since Bitcoin was first introduced, the difficulty of this puzzle has increased exponentially, which means more power is needed to solve the puzzle.
To put computing power into perspective, the miners were tracked trying 450,000 trillion solutions per second to solve the puzzle - and it all went back to October 2015 as reported by The Economist.
Why does one spend all this computing power on mathematical puzzles? That's because they get prizes in the form of bitcoin - or other cryptocurrency, if you mine other cryptocurrency. Miners receive a cryptocurrency amount for each block mined, along with a transaction fee deduction for all transactions in the block.
A Brief History of Blockchain Technology
You can write thousands of pages about the history of blockchain technology, including all the small improvements, big jumps, and companies that have formed over the past decade. Instead of getting you bored with that information, we will give you a brief history of how blockchain technology is like today:
The first mention of the blockchain can be found in the original source code for Bitcoin. You can see the original code for bitcoin on Github.
Bitcoin is the first major virtual currency in the world. It was the first time we saw the impact of blockchain technology on the world around us. The currency was officially introduced in October 2008 when a mysterious figure named Satoshi Nakamoto wrote a paper called, "Bitcoin: Peer-to-Peer Electronic Money System".
In January 2009, the bitcoin code was released to the internet as an open source. Satoshi Nakamoto - whoever it is - "mines" the first bitcoin and officially launches the world's largest cryptocurrency.
Soon after, in April 2011, Satoshi disappeared from the internet and stopped contributing to forums, papers, or bitcoin codes. Despite many attempts to find out who Satoshi Nakamoto is, and even some cases of misidentification, we knew nothing about Satoshi to this day (we will talk more about Nakamoto's identity below).
2013 marked the first year when people started hearing about bitcoin. Investors jumped to bitcoin and startups related to the blockchain. Bitcoin prices hit a high of $ 1108 in November 2013 (the highest since then has been exceeded).
For years since, another cryptocurrency has been created. These coins are called "altcoins" - or alternative bitcoins - because they are cryptocurrency not bitcoin. Litecoin and Dogecoin are the first two to appear, for example. Today, Ethereum holds a solid position as number two behind bitcoin.
Great Innovations in Blockchain Technology for Years
There have been a number of innovations throughout the history of blockchain. Without this innovation, blockchain technology will not be as useful as it is now. The innovation includes all of the following:
Bitcoin:
Naturally, this is the first and most obvious blockchain innovation.
Blockchain:
The second innovation is when people realize that the underlying technology behind bitcoin - blockchain - can be used for more than just bitcoin.
People realize that it can be used for other cryptocurrency, for example, or for various industries and other purposes. This is where the history of blockchain technology and innovation really develops.
Ethereum & The Smart Contract:
The second big blockchain platform after Bitcoin is the blockchain Ethereum. The main advantage of the Ethereum blockchain compared to the previous blockchain is the smart contract system.
Basically, this involves building a small computer program directly on the blockchain. This allows conventional financial tools - such as loans or bonds - to be represented on the blockchain, not just bitcoin and cryptocurrency.
Proof of Stake:
Evidence of ownership began to emerge in late 2016 and early 2017. At present, most blockchain is secured by Evidence of Work, which means groups with the largest computing power make decisions (eg, Miners with the largest shares).
The new blockchain technology replaces this with proof of ownership. This is a major security innovation because it removes the only security weakness on the traditional blockchain - the fact that miners with a 51% share of processing power can control bitcoin or other cryptocurrency.
Scaling:
Scale blockchain technology will speed up processing of blockchain in the future. At present, blockchain technology requires each computer in the network to process each transaction. This is slow and inefficient.
Scale blockchain technology will speed up the process by determining the number of computers needed to process each transaction, and then use other computers for other tasks.
In the end, the history of bitcoin is the history of the world's elite computer scientists who pushed computer and internet technology beyond the known limits. And all these innovations can be traced back to Satoshi Nakamoto.
Who Created the Blockchain? Who is Satoshi Nakamoto?
Blockchain technology was first introduced in a paper, written by Satoshi Nakamoto, titled, "Bitcoin: Peer-to-Peer Electronic Money System". In the paper, Satoshi explained the basis for blockchain technology. All blockchain innovations can be traced back to Satoshi Nakamoto. He is the inventor of blockchain and bitcoin.
Who is Satoshi Nakamoto? Nobody really knows. "He" can be a single Japanese man. Or he can be a group of individuals. Satoshi disappeared from the development of bitcoin and blockchain in April 2011, although he has not contributed to the development of bitcoin since December 2010.
Here are a few things we know - or think we know - about the mysterious creator of the blockchain:
- When Bitcoin was first introduced, Nakamoto claimed to be a Japanese man born on April 5, 1975.
- However, many people believe that the use of traditional Japanese names is bait; most of the research on Satoshi's identity focuses on cryptographers and computer science specialists who live outside Japan - mostly in the United States and Europe.
- Why do people believe that Nakamoto is not Japanese? One of the main reasons is because he writes in perfect English in all online communications; many people also believe he is British or Australian because he uses English English idioms such as "hard blooded" in forum posts.
- Another clue to Nakamoto's identity is a time stamp: Swiss code maker Stefan Thomas analyzed all posts by Nakamoto's bitcoin forum and found that he consistently didn't post during certain hours of the day; based on this information, it is believed that Nakamoto lives in the Eastern Time Zone or Central Time Zone, which can narrow its location to North America or parts of Central and South America (assuming Nakamoto is one person with a normal sleep schedule).
- The first "breakthrough" in Satoshi Nakamoto's identity occurred in 2015, when a parallel investigation by Wired and Gizmodo revealed that Australian programmer Craig Steven Wright could be the inventor of bitcoin; in May 2016, Wright told the BBC that he was Satoshi Nakamoto; Wright, however, did not provide evidence, and many believed Wright was only deceiving the world or seeking attention. Others, however, strongly believe that Wright is Satoshi.
- Other people suspected of being Satoshi Nakamoto included Nick Szabo, an "American covered in Hungarian descent" and a brilliant code maker; Dorian Nakamoto, a Japanese man living in California whose birth name is Satoshi Nakamoto; and Hal Finney, the first person besides Satoshi to work on bitcoin software. Interestingly, Hal Finney is Dorian Nakamoto's next-door neighbor in California. Some suspected he was ghostly writing a neighbor forum post, while others suspected he was using his neighbor's identity to throw the pursuer.
- Today, some people even believe bitcoin is a big government conspiracy, and that Satoshi Nakamoto is a government agent.
- Whoever he is, it is estimated that Satoshi Nakamoto has around 1 million Bitcoin, making it worth more than $ 2.5 billion USD on May 24, 2017.
In the end, the inventor of blockchain technology may never be known. Or, it could be one of the names listed above. Until the mystery is solved, it will play an increasingly interesting role in the myth behind bitcoin. However, Satoshi is undoubtedly the most anonymous billionaire in the world.
No comments:
Write comments