Table Of Contents
Introduction to Blockchain
Blockchain is a decentralized, distributed and public digital ledger that is used to maintain a continuously growing list of records, called blocks, which are linked using cryptography. Any involved record cannot be altered retroactively, without the alteration of all subsequent blocks.
Benefits of Blockchain
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Decentralized - Not owned by a single entity. Every participant in the network can access the history of transactions or confirm new transactions.
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Transparency - Public verifiability of transactions.
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Security - With no central point to be exploited the system is protected against hacking attacks and fraud.
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Immutability - Blocks added to the blockchain can’t be tampered.
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No Intermediary - Peer-to-Peer and business-to-business transactions are completed without the need for a third party.
How Blockchain Works
Blockchain starts with a single block called genesis block.
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Each block stores the following information:
Field | Description |
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Index | Genesis block will have an index of 0. |
Timestamp | A record of when the block was created. Timestamp helps to keep the blockchain in order. |
Hash | Digital fingerprint of data. Hash is of fixed length, easy to compute and infeasible to convert back to data. |
Previous Hash | Hash of the previous block. |
Data | Each block can store data. |
Nonce | Number used to find a valid hash. |
We’ll explain these with the mining of a new block.
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Index
Each new block is given an incremental index value, in this case, it’s 1. |
Timestamp
Block creation timestamp in epoch time, 1560082985.203.
Hash
SHA256 hash of (index, previous hash, timestamp, data, nonce)
CryptoJS.SHA256(1 + '0000018035a828da0878ae92ab6fbb16be1ca87a02a3feaa9e3c2b6871931046'
+ 1560082985.203 + 'HarshadRanganathan' + 29877).toString()
000056f493569b609d6484da94b9031238e80076a8b6a373ae76d3db2746c211
Previous Hash
Hash of the previous block which is ‘0000018035a828da0878ae92ab6fbb16be1ca87a02a3feaa9e3c2b6871931046’.
Data
Block data.
Nonce
We start with a nonce of ‘1’ and keep incrementing it until we find a valid hash.
A Hash is considered to be valid if the number of leading zeros matches the difficulty.
For example, here we have set the difficulty as ‘4’. We will continue to re-generate the hash until it has 4 leading zeros.
As the difficulty increases, the number of possible valid hashes decreases, so it will take more processing power to find a valid hash.
A new block is added to the blockchain only if it meets the following requirements:
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New block has a valid index i.e. block index should be greater than latest block index.
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New block’s previous hash is valid i.e. previous hash equals latest block hash.
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New block has valid hash i.e. it has been correctly calculated.
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New block’s hash meets difficulty requirement.
As the blocks are added and linked using cryptography, they continuously grow the blockchain.
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Immutability
Blockchain provides immutability of records. If an adversary tampers with any of the data in the entire chain, it will invalidate all the subsequent blocks.
Let’s assume we have 3 blocks and we want to tamper the data in block #1.
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If you change the data in block #1 then the SHA256 hash value of the block changes as it is calculated based on the data.
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Block #2’s hash changes as it is based on block #1’s hash.
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Block #3’s hash changes as it is based on block #2’s hash.
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Now, all the 3 blocks are invalid as they don’t meet the difficulty requirement of having 4 leading zeros.
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You will then have to mine all the invalidated blocks again by finding new nonce values to make them valid.
This will be a compute intensive and unfeasible operation as the chain continuously grows with new blocks.