What is Blockchain Technology? Explanation with Examples

What is Blockchain Technology: In this article, we are going to explain what a blockchain is in very basic terms by the end of the article you’ll be able to explain this life-changing technology to those you love saving them from the authoritative dictatorships that never cease to control your every move nevertheless we don’t really discuss politics on this article mostly just ideas so let’s get into it.

What a Blockchain ?

What is Blockchain Technology
What is Blockchain Technology

Read More About Web 3.0

What is Blockchain Technology

What is a Block ?

Terms of cryptocurrency a block is just a bunch of data in fact the data could be almost anything but usually, it’s just a collection of records for the numero uno crypto bitcoin this data is literally just a list of transactions.

For example, it might look like this-

X pays Y $50

A pays B $80 and

Y pays H $15

If we’re dealing with ethereum it’s usually just transactions but it can be a few other things like things called smart contracts which are really neat but we’ll have time to explain them in another article for other altcoins they could be the usage of your wifi or files or documents nonetheless a block is just a collection of records for this.

Example to explain what a blockchain is We gonna stick with a record of transactions like in bitcoin specifically we call this record a ledger because it is a record of value exchanging hands now one thing you need to know is that blocks do have limits and they can only have so many transactions in them.

So, we have to keep adding more blocks for example bitcoin has an average of around 1500 transactions in one block right now this number changes but you don’t really need to know why just know that these blocks do fill up, and then we have to do something with them. well what do we do when these blocks are full we add them to the network now you might be asking how do we do that well we do something called mine them.

Since bitcoin is a proof of work model we have to prove that we mine them this brings us to something called a hash.

What is a hashing function?

A hashing function is a system where you can put something into it and it’ll output a hash there’s a ton of math happening inside this magical black box but essentially you give it something and it gives you something in this case bitcoin uses the SHA 256 hashing function shah stands for secure hashing algorithm and 256 refers to the number of zeros and ones that it has in whatever it puts out so whether you put in your name or the entire dictionary it’ll always output 256 zeros and ones.

Now our computers are smart so they convert these zero to ones to letters and numbers and it is a complicated process and could be an article on its own but essentially with hashing functions you need to know

Two main things

You can’t find the input of a hash you have to guess and check so if you give it it will give you d then if you give it’ll give you j and then if you give it’ll give you u imagine if you wanted to find out what gave you an f you’d have to just keep adding more a’s until you found it the second thing you need to know about hashing functions is that changing the input just a tiny bit changes the output a lot.

That calculating the hash takes some time now it might only take a few milliseconds for one tiny string of text but if you have an entire book that you’re doing or if you want to check a few million variations of it it starts to rack up time and computing power.

So, what bitcoin is doing whenever you mine it is we’re trying to add random numbers to whatever the block is so that we get a special ending.

For example, let’s say we’re trying to mine this x pays y $50 a pays b $50, and y pay h $15

You’ll get this as the output now this is what bitcoin is doing we ask ourselves what number do we have to add to the end of that list to get a zero at the end of the hash well if we start at zero.

What is Decentralized ?

Centralized means one person controls it for example your grades in high school only your teacher had access to add in your grades or change it they could flunk you if they didn’t like you and nothing personal here but maybe you just didn’t understand what they were teaching because they sucked at teaching anyways.

Decentralized means that more than one person can have access to look at and change your grades imagine if all of your classmates were allowed to look at the answers on the test and give you a grade based on your papers and your tests imagine if they could vote on what grade you got instead of just your teacher now this is essentially what decentralized means instead of one person having a list of all the bitcoin transactions.

Literally, anyone who wants to can have them and look at them, and not only that because this is the important part anyone can mine and actually vote on the blockchain this means they can say bill really did pay john $50 or they could make fake transactions and say john paid bill all of his money so you might be asking how do you make sure that someone doesn’t make a fake transaction and spend all of my money well that’s a problem that is solved by using asymmetric encryption with cryptocurrency wallets it’s a little confusing and we just finished a few articles on it so you should go check those out after this article but bringing us back to what decentralized means that begs the question

Why would a group of teenagers want to look at your papers and tests even more so why would they want to spend a lot of time looking at them and then grade the tests well in this analogy they would be paid to almost in every blockchain you get a reward for participating and putting in good votes.

For example for mining bitcoin, you get paid in bitcoin I hope that analogy makes sense so far we’ve been over what a block is it’s just a bunch of data what a hashing function is it’s to make sure that people actually put in work to participate in the blockchain and we’ve gone over what decentralized means basically means that one person does not control it.

Why it’s Actually called a Blockchain ?

With bitcoin, there are two extra things you need to know about one whoever solves the block and finds the magical hash that has however many numbers of zeros we’re looking for they add coinglid’s account received two bitcoins for mining at the top of the block and this is their mining reward. This is how more Bitcoins are actually created although that number two changes and it gets smaller and smaller as time goes on secondly you need to know that they add the hash of the last block to it so the password of the last block gets added to this block and that hash is actually used to calculate this block’s hash so this makes it a chain.

Since each block refers to the last one now this is where the magic of the blockchain works if you try to go back and edit an old block the newer ones all change because you’ve messed up that hash that it pointed to remember when we talked about the hashing function and SHA 256 if you change it just a little bit it changes the entire thing well that’s how we can make sure someone doesn’t go back and add more money into their account in an old block in a sense whatever gets added to the blockchain is written down in history forever because it can’t be changed.

Now, this is actually really good for things like transactions but it’s bad for things like copyrighted material or embarrassing things is the nature of the internet though.

Conclusion

We have blocks that consist of data and in the case of cryptocurrency, it’s usually a list of transactions next after we have a block we have to find the password to that block or basically what is the hash that solves that block and miners do this by guessing and checking until they hit the jackpot and then after they find the solution of that block they make sure that it’s linked to the last block so each block actually has the history of every transaction on it because it refers to a previous block now since each block is connected to the last block this makes it a chain that’s what a blockchain.

LEAVE A REPLY

Please enter your comment!
Please enter your name here