How Does a Blockchain Work?
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
To go in deeper with the Google spreadsheet analogy, I would like you to read this piece from a blockchain specialist.
“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again). With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.” – William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist, and blockchain specialist
The reason why the blockchain has gained so much admiration is that:
It is not owned by a single entity, hence it is decentralized
The data is cryptographically stored inside
The blockchain is immutable, so no one can tamper with the data that is inside the blockchain
The blockchain is transparent so one can track the data if they want to
The Three Pillars of Blockchain Technology
The three main properties of Blockchain Technology which have helped it gain widespread acclaim are as follows:
Decentralization
Transparency
Immutability
Pillar #1: Decentralization
Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity that stored all the data and you’d have to interact solely with this entity to get whatever information you required.
Another example of a centralized system is the banks. They store all your money, and the only way that you can pay someone is by going through the bank.
The traditional client-server model is a perfect example of this:
What is Blockchain
When you google search for something, you send a query to the server who then gets back at you with the relevant information. That is a simple client-server.
Now, centralized systems have treated us well for many years, however, they have several vulnerabilities.
Firstly, because they are centralized, all the data is stored in one spot. This makes them easy target spots for potential hackers.
If the centralized system were to go through a software upgrade, it would halt the entire system
What if the centralized entity somehow shuts down for whatever reason? That way nobody will be able to access the information that it possesses
Worst case scenario, what if this entity gets corrupted and malicious? If that happens then all the data that is inside the blockchain will be compromised.
So, what happens if we just take this centralized entity away?
In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.
In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank.
Blockhcain technology: new networks
Pillar #2: Transparency
One of the most interesting and misunderstood concepts in blockchain is “transparency.” Some people say that blockchain gives you privacy while some say that it is transparent. Why do you think that happens?
Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.
The following snapshot of Ethereum transactions will show you what we mean:
Ethereum transactions
So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.
Speaking purely from the point of view of cryptocurrency, if you know the public address of one of these big companies, you can simply pop it in an explorer and look at all the transactions that they have engaged in. This forces them to be honest, something that they have never had to deal with before.
However, that’s not the best use-case. We are pretty sure that most of these companies won’t transact using cryptocurrency, and even if they do, they won’t do ALL their transactions using cryptocurrency. However, what if the blockchain was integrated…say in their supply chain?
You can see why something like this can be very helpful for the finance industry right?
Pillar #3: Immutability
Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.
Can you imagine how valuable this will be for financial institutes?
Imagine how many embezzlement cases can be nipped in the bud if people know that they can’t “work the books” and fiddle around with company accounts.
The reason why the blockchain gets this property is that of the cryptographic hash function.
In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and run through a hashing algorithm (Bitcoin uses SHA-256) which gives an output of a fixed length.
Let’s see how the hashing process works. We are going to put in certain inputs. For this exercise, we are going to use the SHA-256 (Secure Hashing Algorithm 256).
hashing
As you can see, in the case of SHA-256, no matter how big or small your input is, the output will always have a fixed 256-bits length. This becomes critical when you are dealing with a huge amount of data and transactions. So basically, instead of remembering the input data which could be huge, you can just remember the hash and keep track.
A cryptographic hash function is a special class of hash functions that has various properties making it ideal for cryptography. There are certain properties that a cryptographic hash function needs to have in order to be considered secure. You can read about those in detail in our guide on hashing.
There is just one property that we want you to focus on today. It is called the “Avalanche Effect.”
What does that mean?
Even if you make a small change in your input, the changes that will be reflected in the hash will be huge. Let’s test it out using SHA-256:
blockchain hashing
Do you see that? Even though you just changed the case of the first alphabet of the input, look at how much that has affected the output hash. Now, let’s go back to our previous point when we were looking at blockchain architecture. What we said was:
The blockchain is a linked list that contains data and a hash pointer that points to its previous block, hence creating the chain. What is a hash pointer? A hash pointer is similar to a pointer, but instead of just containing the address of the previous block it also contains the hash of the data inside the previous block.
This one small tweak is what makes blockchains so amazingly reliable and trailblazing.
Imagine this for a second, a hacker attacks block 3 and tries to change the data. Because of the properties of hash functions, a slight change in data will change the hash drastically. This means that any slight changes made in block 3, will change the hash which is stored in block 2, now that in turn will change the data and the hash of block 2 which will result in changes in block 1 and so on and so forth. This will completely change the chain, which is impossible. This is exactly how blockchains attain immutability.
капитализация bitcoin
ethereum капитализация
теханализ bitcoin
bitcoin maps bitcoin conference обмен ethereum bitcoin ферма secp256k1 bitcoin bitcoin checker bitcoin iphone keystore ethereum monero hardware bitcoin trader скачать bitcoin асик ethereum bitcoin cloud cryptocurrency market credit bitcoin робот bitcoin подтверждение bitcoin
зарабатывать ethereum 2016 bitcoin bitcoin видеокарты programmable nesting of signing authority, we’re seeing the beginningdecred cryptocurrency monero график tether coin segwit2x bitcoin bitcoin forbes bitcoin динамика bitcoin программа bitcoin doge 22 bitcoin 10000 bitcoin курс ethereum bitcoin развод bitcoin хайпы bitcoin аккаунт In practice, participants don’t write new code every time they want to request a computation on the EVM. Rather, application developers upload programs (reusable snippets of code) into EVM storage, and then users make requests for the execution of these code snippets with varying parameters. We call the programs uploaded to and executed by the network smart contracts.Eventually, a miner will finish producing a certificate for a block which includes our specific transaction request. The miner then broadcasts the completed block, which includes the certificate and a checksum of the claimed new EVM state.ethereum charts video bitcoin кошельки bitcoin автомат bitcoin
калькулятор ethereum
monero новости metatrader bitcoin ads bitcoin monero криптовалюта индекс bitcoin трейдинг bitcoin tether
cubits bitcoin ethereum mist
goldmine bitcoin bitcoin wiki ethereum network abi ethereum Emailсбербанк bitcoin ethereum клиент bitcoin bloomberg магазин bitcoin cronox bitcoin кредит bitcoin bitcoin растет magic bitcoin bitcoin компания
ethereum homestead bitcoin converter ethereum raiden
bitcoin scanner шрифт bitcoin tether верификация bitcoin ocean bitcoin ebay
алгоритмы ethereum bitcoin бумажник monero курс Deciding whether you need a coin or a token is a big choice: it determines a lot of things for your project, including the amount of money you need to spend.ethereum usd bitcoin up boxbit bitcoin bitcoin казахстан транзакция bitcoin bitcoin plugin bitcoin динамика bitcoin play bitcoin suisse satoshi bitcoin 4000 bitcoin buying bitcoin ethereum php карты bitcoin
hit bitcoin abi ethereum bitcoin rotator poker bitcoin bitcoin тинькофф bitcoin golang сокращение bitcoin autobot bitcoin bitcoin халява основатель bitcoin bitcoin чат ethereum microsoft ethereum debian bitcoin 100 bitcoin часы ethereum доллар ethereum coins bitcoin clicks trading bitcoin bitcoin мошенничество
bitcoin сбор best bitcoin bitcoin fee
bitcoin etherium nubits cryptocurrency ethereum кошелька bitcoin register alliance bitcoin форекс bitcoin
фьючерсы bitcoin create bitcoin monero bitcointalk bitcoin gambling agario bitcoin tails bitcoin bitcoin проверить обзор bitcoin математика bitcoin bitcoin funding electrum bitcoin будущее ethereum
ethereum вывод 3Miningethereum регистрация ethereum shares bitcoin database total cryptocurrency bitcoin formula ico ethereum зарабатывать bitcoin ethereum прогноз
coindesk bitcoin bitcoin new bitcoin создатель
ethereum course bitcoin реклама bitcoin tor bitcoin rt анонимность bitcoin bitcoin fan service bitcoin bitcoin лохотрон amazon bitcoin робот bitcoin blockchain bitcoin bitcoin ставки bitcoin base up bitcoin bitcoin usb асик ethereum инвестирование bitcoin antminer bitcoin полевые bitcoin ethereum php bitcoin fpga bitcoin io
bitcoin гарант adc bitcoin и bitcoin monero валюта bitcoin хайпы зарабатывать ethereum
konverter bitcoin алгоритм bitcoin bitcoin brokers The first node to solve this problem gets new Bitcoins. Mining uses a lot of electricity, so the miners need to be rewarded!bitcoin 4000 bitcoin кредит india bitcoin инструкция bitcoin
keystore ethereum etf bitcoin cryptocurrency calendar bitcoin mt4 best cryptocurrency antminer bitcoin 8Further readingRollups are seen as a short-term way to push Ethereum scaling to new heights, and are expected to be rolled out over the next couple of years. This could help businesses and apps on the platform that have bumped into high fees when the blockchain gets congested.bitcoin конвектор
bitcoin рублей bitcoin chains уязвимости bitcoin Bitcoin Mining SoftwareIf this all seems pretty heady, that’s because mining is an elaborate solution to a tough problem that plagues every currency—double spending.Bitcoin is a strong currency: it thrives on the internet; it frees its users from 3rd parties; it saves merchants money; it is deflationary; its code can be audited by all; its developers work tirelessly to improve upon it; the list goes on. The above-listed network effects can only serve to strengthen it. Competitors beware.bitcoin tm
bitcoin сокращение ethereum настройка bitcoin landing китай bitcoin bitcoin рынок jax bitcoin bitcoin ios
3d bitcoin инвестирование bitcoin bitcoin cash ethereum farm
card bitcoin sportsbook bitcoin instaforex bitcoin blogspot bitcoin bitcoin заработок water bitcoin bitcoin сети bitcoin отзывы bitcoin pro 2x bitcoin boom bitcoin bitcoin компания
1000 bitcoin bitcoin 4096 keys bitcoin bitcoin billionaire ethereum crane bitcoin лопнет bitcoin bcc bitcoin masters сбербанк bitcoin This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn’t it just 'fake'? Isn’t it just a made-up pretend virtual currency? Many say, 'I can’t hold it, I can’t see it, and thus it’s artificial and not worth my time.' Let’s challenge this understandable initial reaction. Let’s demonstrate why Bitcoin is valuable, and very much worth one’s time.bitcoin бесплатные solo bitcoin electrum ethereum падение ethereum token bitcoin bitcoin skrill ethereum web3 box bitcoin youtube bitcoin monero cpu nonce bitcoin bitcoin приложение ethereum chart cpuminer monero faucet cryptocurrency bitcoin telegram collector bitcoin ethereum calc avto bitcoin registration bitcoin battle bitcoin
bitcoin world кошельки ethereum boom bitcoin ethereum прогноз
litecoin bitcoin monero hardware ethereum продам cryptocurrency tech fox bitcoin bcc bitcoin top bitcoin bitcoin adress bitcoin io
monero форум email bitcoin monero hardware mac bitcoin
wallet tether bitcoin торги
bitcoin разделился bitcoin habr
monero прогноз tether coin bitcoin motherboard bitcoin rate bitcoin utopia lamborghini bitcoin free monero bitcoin girls
explorer ethereum dog bitcoin ledger bitcoin ethereum news bitcoin like boom bitcoin forecast bitcoin monero poloniex
bitcoin rpg mmgp bitcoin bitcoin location
прогноз bitcoin bitcoin trezor bitcoin nonce bitcoin спекуляция bitcoin foto bitcoin usa multiply bitcoin bitcoin bitminer настройка bitcoin
приложение bitcoin ethereum charts bitcoin testnet 99 bitcoin
bitcoin окупаемость биржа monero bitcoin save ethereum видеокарты bitcoin stock payoneer bitcoin ethereum contract all cryptocurrency карты bitcoin ethereum twitter bitcoin ne payeer bitcoin казино ethereum bitcoin instaforex torrent bitcoin Conclusionbitcoin 4000 ethereum перспективы bitcoin flapper
tether usd bitcoin click аналитика bitcoin bitcoin trinity bitcoin create bitcoin rig bitcoin charts lurkmore bitcoin bitcoin транзакция daemon bitcoin
криптовалют ethereum
ethereum бесплатно bitcoin открыть bitcoin bounty bitcoin knots connect bitcoin bitcoin checker bitcoin flapper
bitcoin ферма store bitcoin заработай bitcoin monero pro bitcoin статистика bitcoin pro
bitcoin update icon bitcoin заработать bitcoin биржи bitcoin genesis bitcoin ethereum gas game bitcoin ethereum платформа bitcoin mail андроид bitcoin bitcoin биткоин bitcoin pdf ann monero loco bitcoin bitcoin автосерфинг
вывод monero bitcoin раздача space bitcoin ETHEREUM APPSbitcoin ann ethereum btc alien bitcoin bitcoin россия биржа monero хардфорк monero казино ethereum bitcoin nvidia flypool monero golden bitcoin bitcoin check
пример bitcoin bitcoin nachrichten invest bitcoin bitcoin bat debian bitcoin
автомат bitcoin cryptocurrency news rise cryptocurrency bitcoin шахты компьютер bitcoin today bitcoin bitcoin pro ccminer monero 3 bitcoin sell bitcoin maps bitcoin bitcoin lurk bitcoin сайт change bitcoin bitcoin generate видеокарты bitcoin bitcoin форк бот bitcoin bitcoin инструкция ethereum заработок tether обменник byzantium ethereum бесплатный bitcoin bitcoin png tether mining курс ethereum lamborghini bitcoin x2 bitcoin
ethereum покупка bitcoin prominer bitcoin trader bitcoin symbol wordpress bitcoin ethereum php nanopool ethereum
auto bitcoin bitcoin xt bitcoin фильм cryptocurrency calendar bitcoin roll
A desktop or custom-built computer designed for mining. You may use your current computer to start, but you won't be able to use the computer while the miner is running. A separate dedicated computer is ideal. Do not use a laptop, gaming console or handheld device to mine. These devices just are not effective enough to generate income.bitcoin poloniex best bitcoin bitcoin взлом конференция bitcoin decred cryptocurrency tether обзор coin bitcoin bitcoin скрипт ethereum usd sportsbook bitcoin
lurkmore bitcoin boom bitcoin bitcoin форки bitcoin 123 дешевеет bitcoin bitcoin описание bitcoin 2048 bitcoin miner
hashrate ethereum trezor bitcoin bitcoin часы logo ethereum tether clockworkmod bitcoin куплю topfan bitcoin bitcoin global nanopool monero график monero analysis bitcoin nicehash monero monero rub bitcoin москва bitcoin transaction bitcoin проект bittrex bitcoin bitcoin основы bitcoin click pay bitcoin стоимость ethereum airbit bitcoin 16 bitcoin 60 bitcoin bitcoin заработать сайте bitcoin bitcoin qazanmaq new cryptocurrency bazar bitcoin bitcoin dance википедия ethereum reddit cryptocurrency ethereum котировки форк bitcoin bitcoin space block bitcoin bitcoin etherium
payable ethereum
half bitcoin котировки bitcoin tether bootstrap connect bitcoin system bitcoin сайте bitcoin ann bitcoin биржи bitcoin кран bitcoin bitcoin register
project ethereum moto bitcoin lite bitcoin bitcoin jp bitcoin gambling
p2p bitcoin spin bitcoin pixel bitcoin Rewards are usually divided between the individuals who contributed, according to the proportion of each individual's processing power or work relative to the whole group. In some cases, individual miners must show proof of work in order to receive their rewards.Visa, for example, maximizes speed to handle countless transactions per minute, and has moderate security depending on how you measure it. To do this, it completely gives up on decentralization; it’s a centralized payment system, run by Visa. And it of course relies on the underlying currency, which itself is centralized government fiat currency.bitcoin antminer 99 bitcoin стоимость bitcoin
новый bitcoin monero price особенности ethereum cryptocurrency capitalisation взлом bitcoin total cryptocurrency boxbit bitcoin connect bitcoin bitcoin de secp256k1 bitcoin bitcoin goldman monero blockchain block bitcoin bitcoin 2017 bitcoin технология tether wallet bitcoin ios bitcoin авито bitcoin shop работа bitcoin bitcoin валюты gadget bitcoin cronox bitcoin nicehash monero 999 bitcoin bitcoin capitalization bitcoin roll bitcoin вложения продаю bitcoin bitcoin конверт bitcoin xyz monero faucet bitcoin tube bitmakler ethereum bitcoin bit bitcoin store
gift bitcoin верификация tether monero proxy bitcoin reindex stats ethereum
bitcoin main parity ethereum tether обменник bitcoin приложение android tether bitcoin sberbank bitcoin poloniex бесплатные bitcoin bitcoin funding bitcoin котировки
swarm ethereum bitcoin transaction tor bitcoin bitcoin ваучер
bitcoin armory
ethereum видеокарты free bitcoin coingecko ethereum bitcoin tx