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 “bc1qhdazfdka2vu5ypqv2s8gzmqagr7a5fcj642txc 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.
my ethereum daemon bitcoin bitcoin tx сложность ethereum bitcoin farm super bitcoin шрифт bitcoin bitcoin talk bitcoin bear bitcoin покер fox bitcoin bitcoin weekend bitcoin pizza monero стоимость автомат bitcoin обмена bitcoin tradingview bitcoin
ethereum news
bitcoin arbitrage bitcoin pdf monero пул bitcoin inside wirex bitcoin
ethereum usd кошельки bitcoin monero хардфорк кран monero транзакции monero mindgate bitcoin кран bitcoin bitcoin трейдинг
bitcoin kurs bitcoin logo bitcoin shop ad bitcoin
exchange monero
map bitcoin ropsten ethereum
tether io заработать ethereum fox bitcoin
ethereum windows
bitcoin zona byzantium ethereum
bitcoin life ethereum продам nodes bitcoin bitcoin перевод generate bitcoin майнинг bitcoin bitcoin account keystore ethereum icons bitcoin bitcoin simple bitcoin agario box bitcoin token ethereum monero hardfork bitcoin global bitcoin paw block bitcoin bitcoin air pow bitcoin bitcoin switzerland сборщик bitcoin monero обменять перспектива bitcoin bitcoin 4000 bitcoin автокран андроид bitcoin coin bitcoin registration bitcoin spin bitcoin wikileaks bitcoin адрес ethereum bitcoin symbol bitcoin авто bitcoin parser monero кошелек ethereum упал ethereum geth bitcoin multiply clame bitcoin tcc bitcoin hashrate ethereum майнить monero bitcoin location reddit cryptocurrency ethereum форум The proof of stake model also rewards those folks who verify transactions differently. Instead of being paid in virtual coins, the stakeholder earns the transaction fees tied to that block of transactions. bitcoin security ethereum вики ethereum транзакции работа bitcoin bitcoin cache bitcoin биржа
оборот bitcoin ethereum mining
cryptocurrency law bitcoin магазины форум bitcoin продать ethereum bitcoin switzerland blender bitcoin legal bitcoin monero сложность github ethereum cryptocurrency logo bitcoin рубль information bitcoin bitcoin server bitcoin hyip bitcoin fx обновление ethereum earning bitcoin bitcoin лохотрон bitcoin usd миллионер bitcoin flex bitcoin japan bitcoin bitcoin hesaplama bitcoin настройка bitcoin antminer bitcoin шахты tether верификация rpg bitcoin фарм bitcoin технология bitcoin gif bitcoin майнинга bitcoin доходность ethereum новости ethereum bitcoin jp ethereum кошелька bitcoin автосерфинг
habrahabr bitcoin bitcoin котировка
bitcoin миксер bitcoin motherboard bitcoin бесплатные капитализация bitcoin bitcoin hub bitcoin окупаемость bitcoin frog bitcoin tube карты bitcoin poloniex monero service bitcoin Bitcoin vs. Traditional Currenciesbitcoin red взлом bitcoin продажа bitcoin платформу ethereum monero transaction ethereum cgminer казино bitcoin кошель bitcoin bitcoin скачать remix ethereum cryptocurrency nem bitcoin kurs bitcoin talk bye bitcoin что bitcoin bitcoin 5
neo bitcoin bitcoin home bitcoin server Ключевое слово mercado bitcoin
tether tools direct bitcoin monero calculator bitcoin accelerator bitcoin scripting tether bitcointalk 99 bitcoin blockchain bitcoin kurs bitcoin bitcoin q рулетка bitcoin bitcoin разделился avto bitcoin bitcoin life книга bitcoin bitcoin tools daemon monero bitcoin автосерфинг sec bitcoin bitcoin monkey monero faucet app bitcoin
programming bitcoin bitcoin download пример bitcoin bitcoin tor android tether coinder bitcoin anomayzer bitcoin
bitcoin masternode bitcoin видеокарты bitcoin capitalization
poloniex ethereum mining cryptocurrency bitcoin video bitcoin freebie monero client bitcoin код бесплатно ethereum bitcoin telegram обменники bitcoin rush bitcoin кошелька ethereum bitcoin 50 99 bitcoin бот bitcoin bitcoin rpg bitcoin машины
vps bitcoin moneybox bitcoin заработать monero bitcoin халява simplewallet monero википедия ethereum ann ethereum server bitcoin падение bitcoin blue bitcoin monero обменник ethereum создатель bitcoin dogecoin bitcoin dance shot bitcoin bitcoin favicon course bitcoin bitcoin покер bitcoin motherboard
bitcoin удвоить The good news: No advanced math or computation is involved. You may have heard that miners are solving difficult mathematical problems—that's not exactly true. What they're actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a 'hash') that is less than or equal to the target hash. It's basically guesswork.фото bitcoin обновление ethereum ethereum logo polkadot cadaver книга bitcoin asics bitcoin ethereum miners ethereum platform ethereum rig ethereum shares
bitcoin bbc статистика bitcoin ethereum coins монет bitcoin trinity bitcoin If we imagine right now that 10% of the global black market economic activity occurs in Bitcoin and nobody else uses Bitcoin, it would mean $1.5 trillion in goods/services is exchanged Bitcoin per year, which would be immense.bitcoin транзакции code bitcoin bitcoin anonymous config bitcoin полевые bitcoin ethereum gas wmz bitcoin
bitcoin loto
autobot bitcoin форки bitcoin вывод monero bitcoin покупка отдам bitcoin bitcoin xt mine bitcoin баланс bitcoin обновление ethereum bitcoin тинькофф conference bitcoin that it fails to realize the economic principle of cost of production for a commodity. By eliminating production cost, a hornet’s nest of political favoritismavatrade bitcoin Sharding could provide more dramatic scalability. bitcoin mixer jaxx monero bitcoin paypal
secp256k1 bitcoin платформу ethereum bitcoin прогнозы bitcoin work bitcoin bazar 6000 bitcoin bitcoin создать nanopool monero bitcoin пожертвование bitcoin gambling bitcoin 4 forum cryptocurrency
котировка bitcoin monero pro ethereum casper proxy bitcoin bitcoin 1000 foto bitcoin film bitcoin bitcoin compromised bitcoin life nanopool ethereum
иконка bitcoin bitcoin nachrichten bitcoin падает bitcoin комбайн ethereum описание bitcoin token monero ico bitcoin суть mainer bitcoin register bitcoin андроид bitcoin moto bitcoin 1080 ethereum bitcoin grafik bitcoin получение ethereum токен legal bitcoin bitcoin protocol bitcoin терминалы payoneer bitcoin
ethereum supernova bitcoin preev online bitcoin приложения bitcoin bitcoin покупка multiply bitcoin bitcoin forbes
foto bitcoin bitcoin бизнес cryptocurrency top ava bitcoin баланс bitcoin nova bitcoin биржи bitcoin bitcoin официальный multibit bitcoin habr bitcoin ledger bitcoin Supply Chainbitcoin yandex bitcoin инвестиции bitcoin steam arbitrage cryptocurrency bitcoin эмиссия график ethereum
адреса bitcoin credit bitcoin
ethereum siacoin cryptocurrency wallet bitcoin карты tokens ethereum It is those people, technology historians, and nostalgic old-timers who are the intended readers of this site.New bitcoins are created roughly every 10 minutes in batches of 25 coins, with each coin worth around $730 at current rates. Your computer—in collaboration with those of everyone else reading this post who clicked the button above—is racing thousands of others to unlock and claim the next batch.While wallet apps work well and are relatively safe, the safest option is a hardware wallet you keep offline, in a secure place. The most popular hardware wallets use special layers of security to ensure your keys are not stolen and your bitcoin is safe. But, once again, if you lose the hardware wallet your bitcoins are gone unless you have kept reliable backups of the keys.16 bitcoin pixel bitcoin click bitcoin сколько bitcoin time bitcoin bubble bitcoin bitcoin растет status bitcoin
bitcoin фирмы bitcoin school When something becomes successful, the law of large numbers starts to kick in. It takes a small amount of money to move the needle on a small investment, but a lot of money to move the needle on a big investment. It’s easier for the network to go from $20 million to $200 million (requiring a few thousand enthusiasts), in other words, than to go from $200 billion to $2 trillion (requiring mass retail adoption and/or broad institutional buy-in).sell ethereum Out of New Jersey style, software engineers developed a set of ad-hoc design principles that went against the perfectionism of institutionalized software. The old way said to build 'the right thing,' completely and consistently, but this approach wasted time and often led to an over-reliance on theory.A hash of the generated proof-of-work. This value will be null when a block is pendingloan bitcoin transaction executionwallets cryptocurrency перевести bitcoin registration bitcoin bitcoin форекс asic ethereum обсуждение bitcoin сигналы bitcoin bonus bitcoin ethereum обменять ethereum платформа ethereum ферма bitcoin arbitrage bitcoin кошелька simple bitcoin gui monero p2p bitcoin альпари bitcoin пулы bitcoin bitcoin talk why cryptocurrency расчет bitcoin epay bitcoin bitcoin aliexpress monero майнинг cryptocurrency price продам ethereum курса ethereum bitcoin loans видеокарты ethereum By using THIS LINK you'll get $10 in bitcoins after you buy $100 in Bitcoins. You can then convert your Bitcoins and bonus into Litecoins if you wish.bitcoin dice
Each transaction is recorded into a blockethereum алгоритм Critics of Bitcoin point to limited usage by ordinary consumers and merchants, but that same criticism was leveled against PCs and the Internet at the same stage. Every day, more and more consumers and merchants are buying, using and selling Bitcoin, all around the world. The overall numbers are still small, but they are growing quickly. And ease of use for all participants is rapidly increasing as Bitcoin tools and technologies are improved. Remember, it used to be technically challenging to even get on the Internet. Now it’s not.16 bitcoin It is necessary to specify the version number of Solidity at the beginning of code as it eliminates incompatibility errors that can arise while compiling with another version. This is a mandatory clause that has to be there at the top of any Solidity code you write. You also need to mention the correct version number for the code.roulette bitcoin ethereum аналитика wifi tether bitcoin asic bitcoin биржа ropsten ethereum
bitcoin компания bitcoin скачать bitcoin портал stats ethereum ethereum получить ethereum usd киа bitcoin click bitcoin bitcoin коллектор Blockchain technology could be used for elections in some of the most corrupt countries in the world. What is the cryptocurrency to the people of Sudan or Myanmar? It’s a voice. Free elections could be held without fear of violence or intimidation.Is it worth your time to mine for cryptocoins?заработок ethereum bitcoin s bitcoin бесплатно контракты ethereum coinwarz bitcoin bitcoin обменник block ethereum bitcoin котировки bitcoin терминал accelerator bitcoin
bitcoin 2017 ethereum заработок ethereum calc
bitcoin fake bitcoin monkey zebra bitcoin bitcoin school
habrahabr bitcoin bitcoin betting games bitcoin bitcoin grafik cryptocurrency wikipedia форум ethereum nonce bitcoin bitcoin donate buy tether antminer bitcoin cryptocurrency wikipedia bitcoin вложить автомат bitcoin tokens ethereum unconfirmed bitcoin bitcoin спекуляция работа bitcoin frontier ethereum bitcoin иконка bitcoin legal dat bitcoin bitcoin брокеры moon bitcoin ethereum addresses tether clockworkmod индекс bitcoin flappy bitcoin birds bitcoin bitcoin investment bitcoin заработать
обмен ethereum bitcoin index android tether протокол bitcoin книга bitcoin обналичить bitcoin ethereum android компиляция bitcoin технология bitcoin Additionally, simple observations from economics make it clear what the outcome of an uncapped block size will be. Since there is a virtually unlimited demand to store information in a replicated, highly-available database, blockchains will be used for storage of arbitrary data if space is sufficiently cheap. The problem here is that the data stored exerts a perpetual cost on the verifiers, as they have to include it in the initial block download and buy larger and larger hard drives in perpetuity. (Ethereum’s State Rent proposal acknowledges this problem and suggests a solution.)bitcoin london
Elliptic Curve Diffie-Hellman-Merkle (ECDHM) addresses are bitcoin address schemes that increase privacy. ECDHM addresses can be shared publicly and are used by senders and receivers to secretly derive traditional Bitcoin addresses that blockchain observers cannot predict. The result is that ECDHM addresses can be 'reused' without the loss of privacy that usually occurs from traditional Bitcoin address reuse.boom bitcoin бизнес bitcoin криптовалют ethereum rpg bitcoin bitcoin курс ethereum casper bitcoin tor bitcoin alien
bitcoin анонимность monero logo логотип bitcoin bitcoin bear ethereum настройка fork bitcoin bitcoin dat armory bitcoin There are no multi-day holding periods and no risk of fraudulent chargebacks. It is safe from ‘capital controls’ - these are measures that restrict the flow of traditional currencies, sometimes to an extreme degree, in countries experiencing economic instability.You have some bitcoins in your wallet and want to spend them on your daily purchases. But what would that look like in a world where Visa, Mastercard and other financial services still dominate the market? bitcoin алгоритм micro bitcoin отзывы ethereum forex bitcoin
bitcoin кредиты mempool bitcoin addnode bitcoin ethereum ubuntu кошелек ethereum ledger bitcoin asus bitcoin
spin bitcoin laundering bitcoin ethereum сбербанк баланс bitcoin bitcoin автосерфинг miningpoolhub monero monero hashrate auction bitcoin
forex bitcoin bitcoin 123 ethereum studio bitcoin 50000 ethereum news cryptocurrency analytics ethereum краны bitcoin pdf bitcoin script cgminer bitcoin tether apk
эмиссия ethereum bitcoin блокчейн land bitcoin debian bitcoin сбербанк bitcoin monero address bitcoin accepted
bitcoin payeer ethereum serpent bitcoin telegram monero форум bitcoin аккаунт bitcoin node bitcoin node hardware bitcoin litecoin bitcoin credit bitcoin лотерея bitcoin криптовалюту bitcoin
neo bitcoin roulette bitcoin bitcoin foundation ethereum pools bitcoin продам qiwi bitcoin ethereum купить bitcoin scrypt In September 2019 the Central Bank of Venezuela, at the request of PDVSA, ran tests to determine if bitcoin and Ethereum could be held in central bank's reserves. The request was motivated by oil company's goal to pay its suppliers.bitcoin ebay solidity ethereum 10 bitcoin free bitcoin nodes bitcoin ethereum coins пожертвование bitcoin bitcoin эфир
free ethereum
bitcoin foundation ethereum pools системе bitcoin flypool monero bcn bitcoin p2pool ethereum
x2 bitcoin автомат bitcoin bitcoin motherboard bitcoin стратегия
адрес bitcoin
ethereum blockchain bitcoin weekend locate bitcoin вики bitcoin
monero js tether android bitcoin проблемы stealer bitcoin exmo bitcoin takara bitcoin arbitrage bitcoin bitcoin eth demo bitcoin bitcoin настройка capitalization bitcoin cryptocurrency capitalization bitcoin видеокарты
trader bitcoin bitcoin майнить bitcoin gif ethereum клиент bitcoin 4
difficulty monero ethereum bitcoin bitcoin рост
gadget bitcoin kaspersky bitcoin bitcoin форекс вывод monero
bitcoin analysis
ethereum supernova bitcoin capital ethereum проекты
mineable cryptocurrency bitcoin окупаемость monero gpu pay bitcoin
иконка bitcoin tether tools bitcoin 0 bitcoin aliexpress сеть ethereum bitcoin space сбор bitcoin sgminer monero bitcoin simple динамика ethereum pow bitcoin кредит bitcoin пример bitcoin testnet bitcoin
gek monero
bitcoin store trader bitcoin wikipedia cryptocurrency bitcoin nodes bitcoin перевести bitcoin инвестирование смесители bitcoin bitcoin novosti подтверждение bitcoin cpa bitcoin тинькофф bitcoin bitcoin paw bitcoin multisig Until crypto is more widely accepted, you can work around current limitations by exchanging cryptocurrency for gift cards. At eGifter, for instance, you can use Bitcoin to buy gift cards for Dunkin Donuts, Target, Apple and select other retailers and restaurants. You may also be able to load cryptocurrency to a debit card to make purchases. In the U.S., you can sign up for the BitPay card, a debit card that converts crypto assets into dollars for purchase, but there are fees involved to order the card and use it for ATM withdrawals, for example.people bitcoin miningpoolhub monero bitcoin crash bitcoin конверт bitcoin vizit bitcoin бот cryptocurrency faucet difficulty ethereum bitcoin hosting bitcoin перевести автомат bitcoin monero fork auto bitcoin
кошелька bitcoin bitcoin графики bitcoin bazar новые bitcoin
bitcoin презентация bitcoin рынок ethereum проекты ethereum продать mini bitcoin форекс bitcoin bitcoin spinner
cryptocurrency calendar bitcoin gpu сайты bitcoin скрипты bitcoin доходность ethereum claim bitcoin view bitcoin xronos cryptocurrency
bitcoin заработок сбербанк bitcoin
roulette bitcoin bitcoin hash bitcoin хешрейт bitcoin hacker bitcoin hacker
hyip bitcoin кошельки bitcoin bitcoin flapper bitcoin бонус cryptocurrency charts ethereum rig bitcoin трейдинг new bitcoin connect bitcoin 500000 bitcoin bitcoin бот topfan bitcoin
tether кошелек ethereum хардфорк protocol bitcoin статистика bitcoin кредит bitcoin bitcoin cny pps bitcoin bitcoin blocks bitcoin update сайт ethereum
сложность ethereum bitcoin cz monero hardware bitcoin футболка bitcoin бот analysis bitcoin atm bitcoin bitcoin faucet bitcoin dogecoin monero nicehash bitcoin work китай bitcoin ethereum solidity
bitcoin кран
инструмент bitcoin mixer bitcoin обмен bitcoin bitcoin instant bitcoin картинка продать bitcoin 4 bitcoin mixer bitcoin tether комиссии 