What is Blockchain Technology, how does it work?

What is Blockchain

What is BlockChain?

Block chain the most hyped technology in modern times its going to revolutionize the world in our life bring democracy everywhere and give power to the people so there’s a lot of interest and hype around the technology. Block chain is based on basic principles of the fact that the ledger is open and public such that everyone can see and  vide eight transactions the fact that the ledger is distributed and essentially exists in many nodes on the network removes the dependency  on the third party.

First Explaining  about  Bit Coin & Blockchain

There is two basic terms:

Bitcoin:  Bitcoin means is a digital coin it’s money which is digital.

Blockchain: Block chain is technology that enables moving digital coins or assets form one individual to another individual, it’s very important to understand that Bitcoin is not block chain it is a a common language.

Problems of Blockchain:

  • A Block chain attempts to solve the problem by money transfer
  • If a person a wants to move money to transfer  money to a person B let’s let’s say from Israel to Japan this is typically done using a third trusted party, I want to move transfer to be and all there is a third party to transfer money to be the trusted party because it is trusted identify be in Japan identifies that as a person and the bank account and then move the money after taking some faith to say wire account in Japan this typically takes about three days or more but it takes some time.

Principles of Blockchain :

1.First Principle

Open Ledger:  Open ledger it is essentially a chain of transaction and this is one of the reason that this is called block chain.

Example:

we have a network of four people that actually wants to move money from one another and let’s assume that at Genesis at the moment of the inception of this network A has $10 from the beginning now let’s see the concept of the open ledger and how it is being implemented in block let’s A  say that a wants to move to be five donors now we are going to add a transaction a move to be $5 and we are going to link it into the already existing transactions then  let’s assume that B wants to movie to D $3, so we are going to do the same  link another transaction into the ledger into the chain that say B moves to D$3 finally if you want to move one donor from D to C again we will do the same from  D to C again we will do the same process the move to C1 donar and we link  it to select to say open ledger .

2. Second principle

Distributed open ledger: Block chain is going to change the centralized one and to distribute it across the nodes in the network.

we have a centralized place now that managing the ledger but remember that block chain goal is to get rid of the centralized place so the, so  distributed ledger which means block  chain is going to change the centralized one and to  distribute it across the nodes in the network which means D

Example:

 Can have a copy of the legend and can hold in this note a can do the same and have a copy     of the ledger and anyone, else participate in this network and holland’s allege can horns a chain of  events that happens now what we got is that  the ledger is distributed  and essentially we don’t need any more the centralized place that hold the ledger we achieve the goal we got rid of the centralized trusted party .however we created another problem or a new problem now when there are various copies of the ledger in the network ,we need to make sure that all these copies are synchronized and all the participants in the network see the same copy of the ledger the same version of the ledger

3.Third principle:

  • Synchronize the Ledger

This block chain is the most interesting one. The ledger is distributed across various nodes and now what we need to understand is, how in this kind of distributed ledger nodes understand and synchronize the better across and the stuff.

Example:

Now B wants move to C $5 this going to do publish and broadcast this intended transaction to the network, so everyone will see immediately that B wants move $5 to C, this is an invalidated transaction, this not getting yet into the letter, in order to get into the letter.  we need to Understand the concept of miners. Miners are going to do the following thing, Miners are special nodes which can hold the ledger in the case let’s say that D and A are miners, miners are going to compete among themselves. Who will be the first to take this transaction and validate that one and be able to validate and put it into the ledger the first miner do that will get a financial reward in this case.

Bitcion what it means to win the competition in order to be the first that is able to  take the transaction and add it to the ledger a miner needs to do two things first thing needs to validate the new transaction this is it the ledger is open and you can immediately calculate whether can immediately calculate whether  B is does have their funds in order to make the transfer this is easy the same the second thing that a miner  needs to do is to find a special key that will enable this miner to take the pervious transaction and to this previous  transaction lock the  new transaction in order to find this scheme this miner needs to invest computational power and time because this search of the key is random  the miner is repeatedly guessing new  keys until it finds interest that match this kind of a random puzzle .the first one will  get the  financially, how ledger’s are synchronized  across the network the a minor was able to solve the puzzle and be able to take this transaction  and edit to say it own ledger, now is going  to publish the solution to save time network to broadcast it to the entire network , which means he would say here is a validated transaction and here is the lock here is key that enables everyone on  the ledger  on the network to take it and edit to serve on ledges.

Example : This transaction is already validated and can be added to the ledger which means there  is no trying to resolve this transaction and get a reward a will immediately take this transaction add it to its own ledger and we look for another transaction to work on and hopefully to get the reward  next time.

Summary:

How blockchain works:

  • Block chain is not a Bit coin there are two different things, Block chain is based on basic principles of the fact that the ledger is open and public such that everyone can see and vide eight transactions the fact that the ledger is distributed and essentially exists in many nodes on the network removes the dependency  on the third party.
  • We learned about the concept of miner.
  • Who are Special nodes in the network ,that their role is to validate transactions and adds into the ledger we touched only the fact the economic incentive of miner essentially ensures that collectively they agree.
  • what is the official ledger’s that should be used by everyone ,we need to remember about the concepts and ideas behind  blockchain the implementation itself.