The term “blockchain” refers to a growing number of documents, or “blocks,” securely linked together through encryption. Each block contains transaction information, a timestamp, and a cryptographic hash of the last one (generally represented as a Merkle tree, where leaves represent data nodes). The timestamp signifies that the transaction data was present when the block was published and was used to compute the hash. Because each block carries information about the block before the first one, each new block strengthens the links in the preceding ones.
As a result, blockchains are difficult for data manipulation since information in any given block cannot be modified retrospectively without altering all subsequent blocks.
Blockchains are usually operated as publicly distributed ledgers via peer-to-peer networks in which nodes follow a protocol to communicate and validate new blocks. Although blockchain records are not immutable because of the potential of forks, they can be considered secure by design and serve as an example of a distributed computing system with significant Byzantine fault tolerance.
According to research by Stuart Haber, W. Scott Stornetta, and Dave Bayer, a person (or group of people) known as Satoshi Nakamoto created the Blockchain in 2008 to serve as the open transaction log of the cryptocurrency bitcoin. Satoshi Nakamoto’s existence is still unknown. Bitcoin was the first digital currency to employ blockchain technology to avoid double-spending without the assistance of a central server or other authorized organization.
Other applications and open-access blockchains, which are heavily used by cryptocurrencies, have been influenced by the Bitcoin design. Blockchain is considered to have a unique type of payment rail.
Private blockchains have been proposed for corporate use. Others have claimed that public Blockchain if built intentionally, may be more decentralized and hence more secure in reality than permission less blockchains. However, Computerworld referred to the advertising of privatized blockchains without an adequate security mechanism as “snake oil.”
Types of Blockchain:-
At least four types of blockchain networks exist today: Sidechain blockchains, private blockchains, public blockchains, and hybrid blockchains.
- Public Blockchain:- A public blockchain has no security controls. Anyone with Internet access can use it to send transactions and join up as a validator (i.e., participate in executing a consensus protocol). Individuals that secure such networks through a Proof of Stake or Proof of Work method are frequently rewarded financially. Bitcoin and Ethereum are two of the most popular and well-known public blockchains.
- Private Blockchain:- Blockchains with permissions are private. Only users and validators have access. You cannot access it unless the network administrators invite you. Distributed Ledger (DLT) is commonly used to distinguish private blockchains from other peer-to-peer decentralized database applications that are not open ad-hoc compute clusters.
- Hybrid Blockchain:- A hybrid blockchain includes characteristics of both centralized and decentralized blockchains. The chain’s precise operation may vary depending on how much centralization and decentralization are used.
- Sidechains:- A blockchain ledger that operates side by side with the main Blockchain is referred to as a sidechain. For the sidechain to function independently of the effective Blockchain, entries from the primary Blockchain can be linked to and from the sidechain (where those entries typically represent digital assets) (e.g., by using an alternate means of record keeping, alternate consensus algorithm, etc.
Mechanism of Blockchain:-
Blockchain aims to enable sharing and recording of digital information without editing. A blockchain is a base for immutable ledgers or records of transactions that cannot be modified, deleted, or eliminated. Because of this, blockchains are also distributed ledger technologies (DLT).
Before Blockchain became a broadly applied application in 2009, the blockchain concept was introduced as a research project in 1991. Since then, the introduction of a slew of cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts has resulted in a rapid rise in the use of blockchains.
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