Understanding Blockchains

What is a Blockchain?

• A blockchain is a chain of blocks containing information.
• Originally described in 1991 to timestamp digital documents.
• Adapted in 2009 by Satoshi Nakamoto for Bitcoin.

How Do Blockchains Work?

• Components of a Block:
  • Data: Varies based on blockchain type (e.g., Bitcoin records transaction details).
  • Hash of the Block: Unique identifier (like a fingerprint) for the block and its contents.
  • Hash of the Previous Block: Creates a secure chain of blocks.

Example of a Blockchain

• Genesis Block: The first block, does not point to a previous block.
• Tampering Example:
  • Changes in one block's data alter its hash.
  • Subsequent blocks become invalid due to hash mismatch.

Security Mechanisms

• Hashes: Detect changes in blocks; if a block’s fingerprint changes, it is no longer the same.
• Proof-of-Work:
  • Slows creation of new blocks (e.g., Bitcoin takes about 10 minutes).
  • Prevents easy tampering as redoing the proof-of-work for all subsequent blocks is required.
• Distribution:
  • Uses a peer-to-peer network; anyone can join.
  • Each node has a full copy of the blockchain to verify its integrity.

Consensus Mechanism

• New blocks are sent to the network.
• Nodes verify and add blocks to their own copies.
• Tampered blocks are rejected by other nodes.
• To successfully tamper with a blockchain, one must:
  • Tamper all blocks on the chain.
  • Redo the proof-of-work for each block.
  • Control over 50% of the network.

Evolution of Blockchains

• Introduction of Smart Contracts:
  • Programs stored on the blockchain.
  • Allow automatic exchange of coins under certain conditions.
• Potential uses beyond cryptocurrency:
  • Storing medical records.
  • Creating digital notaries.
  • Collecting taxes.

Conclusion

• Understanding the basic workings of blockchains and their applications is crucial.
• Further exploration available through coding tutorials on implementing blockchains.