Basic knowledge #3
WHAT IS BLOCK CHAIN?
Basic knowledge – Part 03
When you learn about cryptocurrencies, you will likely hear a technology term that says “BLOCK CHAIN“. Blockchain is a technology that has become extremely popular around the world in recent years. Along with Bitcoin and cryptocurrency, it becomes a topic of discussion in many newspapers and in people’s conversations. When it comes to blockchain, however, there is still a lot of controversy. Many People fear that Bitcoin might just be a bubble, many think that the technology behind it – blockchain – is a breakthrough and that the technology will continue on its way until it is accepted and integrated into the internet.
What is blockchain anyway? In what areas of life can it be used and why has it received so much attention lately?
Note: Articles of the series “Basic knowledge for newcomers“Although it is only basic knowledge, the terms and the knowledge in them are relatively ambiguous for those first encountered. So grab a drink and clear your mind before you get ready to learn this new knowledge.
TABLE OF CONTENTS
- What is blockchain?
- Why is blockchain disruptive?
- How blockchain changed the world
- Further references
If you are curious and try to search for this keyword on Google, the result you will get is that there are dozens of blockchain definitions out there. Please click the first few results and read it, to be honest, when I first heard about this so-called “blockchain” I had a headache after reading these definitions. You can try a little before reading the definition I give below.
“Blockchain is a type of data, a way of storing transaction records and values.”
In simple terms, that’s it, maybe with that simple definition, a lot of people will think: what the hell, why is such a monumental thing just a bunch of data.
Although blockchain is a type of data, this definition does not fully describe the true nature of the way blockchain keeps value and transaction records.
Blockchain is a new technology, but it was formed by combining 3 types of old technologies that existed before but were cleverly combined to make an outstanding difference. 3 technologies combine to form blockchain This is :
- Cryptography: Use of public key and hash function to ensure transparency, integrity and data protection.
- P2P network: Each node on the network is considered a client as well as a server to store a copy of the application.
- Protocol: All nodes participating in the system must comply with the rules of the game of consensus (PoW, PoS …) and are driven by economic motivation.
Put simply, blockchain is like a “The ledger cannot be changed“.
The first technology is cryptography, which we use to encrypt information.
You imagine, when transactions take place, network nodes (computers) record the transaction information in a general ledger. And this “book” uses encryption technology to ensure that the status of the accounts involved is public (other than the identity of the account holder), anyone can see the balance. Every account in the book, but I don’t know who the real owner of that account is in real life (unless complicated techniques are used to track them down).
And for each account contained in this “book”, only the real owner of that account (who has the private key) can access it in order to earn pocket money. Next, any changes to the “book” will be published. However, once the information is written on it, it is almost impossible to change.
The second technology is peer-to-peer (P2P) network technology, also known as distributed network. This technology is known as a peer-to-peer or peer-to-peer network, which is a network that connects directly to each other without going through an intermediary server.
With the above “book” it is not kept by a single “powerful” person, but shared with everyone in the community. Anyone interested can also download a version of this notebook to their computer for monitoring and updating (then their computer becomes a node – the node of the network). Every change in the book is updated almost instantly on all network nodes, and everyone has free access without going through a server to access it.
The peer-to-peer character of the “book” is also reflected in the function: anyone who wants and has the ability can “apply” to be an accountant – an accountant (you have heard from the accountants). is the accountant in question). And then every accountant has the opportunity to record changes in the “magic book”. Who gets the right to book the salary (in this case the reward of the network) is decided by the 3rd technology.
What if an account holder shakes hands with the accountant chosen to do the bookkeeping to commit their fraud (using the same coin to double spending)? The “book” is called a miracle because it resists this deception. Once an accountant has been selected to do the accounting, the newly recorded data is updated for all other accountants, and if the other accountants discover fraud, they issue a system-wide warning, whereupon the new data is counted as invalid and the accounting becomes newly elected.
In other words, in order for the data to be properly recorded, a “consensus” of all accountants is required. As you can see, the power to influence the state of the notebook is not in the hands of a single person; everyone in the network has a say.
The third technology is Protocol (Game Protocol). A protocol is a set of rules that govern how objects in a network exchange information, communicate with one another, and agree with one another. How is it applied to blockchain?
The main essence of blockchain is how data is stored, created and distributed on the network.
All processes of saving, adding and distributing data must be carried out consistently according to predefined rules. And due to the decentralized nature of the blockchain, any change to the data must reach the consensus of the computers (nodes) in the network and not be decided by a specific server. Therefore, there must be a set of rules between computers (nodes) in the network to regulate how they communicate and exchange information with one another in order to achieve consensus across the network. This is the job of protocol technology.
To come back to the example above: Every change to the system that is to be recorded in the “book” requires validation and a “consensus” in the network. There are many people who want to get the right to book, because only when they have the right and have completed the bookkeeping will they be “paid” (also called a bonus). That said, there are many accountants who can be selected to book and receive salaries, but only one can be selected. Once selected, that person will proceed with the bookkeeping. However, for this additional entry to be valid, it must be approved by other accountants across the network.
The whole process of selecting the accountant, distributing the additional entries to the whole network of accountants, and how the accountants came to a consensus to create the standard version of the “book” (the standard version is the one that most accountants use) on the network will validate, and they continue to work on writing this version) requires the exchange of information, communication communication between elements on the network. And this process follows certain rules.
WHY is the blockchain breaking?
Take Bitcoin as an example: Blockchain is essentially a transparent shared ledger that many users can monitor and manage together. Every time a bitcoin is issued, a transaction is created, the user can find detailed information such as the sender, recipient and the amount of the bitcoin transaction.
However, to ensure the legitimacy of Bitcoin, the main transaction is secured by a cryptographic technique with a secret signature called “private key” that is kept in the user’s Bitcoin wallet along with their Bitcoins. It normally takes ten minutes for the system to confirm a transaction, but once it is confirmed it is immediately added to a “block”. Blocks are linked over time to maintain the consistency and integrity of the system, creating a chain of blocks known as a “blockchain”. Whenever there is a change, the entire blockchain chain is updated. Blockchain helps secure and streamline transactions effectively without the need for intermediaries to manage the process.
The emergence of blockchain is like other milestones in human history: looms, computers, the internet
This system will change the way we believe and see the world and affect the development of all of humanity.
The greatest potential lies in the application of “smart contracts” on the blockchain platform: The …