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The miracle of Blockchain

Written by  May 08, 2020

What is a blockchain? and what makes it safe and helpful in managing cryptocurrencies?

We need to understand the technology behind the whole thing.

Blockchain was first developed in 1991, by researchers Stuart Haber and W. Scott Stornetta, it was originally intended to timestamp assets and shield them form being tampered with by any means, therefore due to its several attributes and applications, it stood by idle till the year 2009 when it was adopted by Satoshi Nakamoto pseudonym of the creator or the creators of the Bitcoin.

Blockchain is principally a distributed ledger and it’s open to anybody that has digital property, or more simply put digital assets, once some data is stored to the blockchain network it’s very difficult to change it, it's virtually impossible.

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How it works?

Each Block among the network consists of three parts: the data, the hash of the block and also the hash of the previous block; the type of data it holds in every block depends entirely on the type of the Blockchain, as an example the Bitcoin Blockchain stores primarily details about: the sender, the receiver, and transaction, as well as timestamps, and amounts.

Every block in the Blockchain, has its distinctive signature, referred to as a hash, it can be compared to a fingerprint, every hash stores data on that block, once a block is been created it generates its one hash, therefore while making changes to that particular block it also changes the hash, hashes are very helpful in detecting changes to a block, if the fingerprint of a block changes, it is no longer the same block. The hash of the previous block creates the chain of blocks and represents the primary layer of security that makes the blockchain secure.

Each block contains its own hash, and also the previous ones hash, the hash from block number 3 points on to block number 2 and block number 2 points to block number 1, the first block in a chain can’t move to an alternative block being the first link in the chain, it is referred to as the genesis Block.

If block number 2 is tampered with, it causes the block to alter its own value for the hash, and consecutive this will cause block 3 and also the following ones to mismatch and become invalid, because they no longer store a legitimate hash of the previous block, in other words, if you modify one hash for one block this will make the whole chain invalid.

At that time the 'hash' idea was a breakthrough and very helpful, it was imperative to make blockchain safer than just using hashes, giving the computer’s processing and fast calculation power, that could make hundreds of thousands of hashes per second, it could be possible to tamper with a block and therefore making the blockchain valid once more.

So for one more additional layer of security blockchain enforced “Proof of work” this might really slow down the creation of blocks, as an example in Bitcoins case it can take up to 10 minutes in order to add a new proof of work, and additionally add a replacement block to the chain, making it harder to tamper with, as a result of you may nned to recalculate the proof of work of all the other blocks within the blockchain.

The security of the blockchain comes from the use of hashes and also the the proof of work mechanism, the node will verify this so as to visualise that everything remains in order when somebody creates a replacement block, that block is sent to everybody in that network, each node then verifies the block in order to make sure that it hasn’t been tampered with and if everything checks out, each node then adds this block to their own blockchain.

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All the nodes in one network are called consensus they agree which block is and which block isn’t valid, and blocks that are tampered with are removed and rejected by other nodes within the network, in other words, in order to successfully tamper with a block, you will have to tamper with all blocks in the same chain and redo proof of work for every block and also take control of more than 50% of the peer to peer network, this is virtually impossible to do.

If you are new to the Cryptocurrency world and would like to open an account we recommend Cex.io.

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Paul Saunders

Crypto tech journalist, Paul specialises in Crypto news having worked and traded in the field for over 5 years and has previous Blockchain admin roles to his credit. His knowledge and experience in Crypto tech is very important to us and his contribution is invaluable.

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