Blockchain technology is an extraordinarily perceptive invention of the 21st century that took its historical roots from the early 1990s.
Blockchain is simply a decentralized peer-to-peer distributed ledger technologyDefinition of blockchain
With blockchain, it’s safe and reliable source to store and record transactions across many computers in the form of a chain of blocks. It was initially proposed for the cryptocurrency bitcoin.
Starting from Digi-cash (1989) blockchain took it’s path to a well-modernized version, secure enough to conquer the e-world.
Digicash : A digital currency system that helped users to indulge in anonymous transactions.Definition of digicash
Being an early bird the result did not meet with success. Later in 1996 e-gold, a digital currency backed up real gold came into play, which is an illegal money transfer gradually faced its downfall. In 1998 b-money and bit-gold two separate but similar decentralized currency systems put forward by different cryptographers came into action. Ripple pay (2004), a cryptocurrency, set out its way as a system for exchanging digital assets among reliable parties. Reusable proofs of work(rpof) which sprouted in the same year partly as an effect of bit-gold, was a prototype for digital cash and was a precursor to bitcoin.
Blockchain serves as an entrenched and tamper-proof data store that comes in sequential chain with cryptographic hashing.
Being the underlying system, blockchain acts as a gateway to trust-free consensus-based transaction where consensus is an agreement among all the participating nodes of the blockchain network. Taking collective decisions through consensus strengthens the network and eliminates conflicts among the participating nodes. Consensus strategy ensures a common unambiguous ordering of transactions and blocks and guarantees the integrity and consistency of the blockchain across geographically distributed nodes. It also lowers the risk of fraudulent transactions, because tampering would have to occur across many places at exactly the same time.
Being a decentralized peer-to-peer distributed ledger it is easy to transfer information from the sender to receiver like we do in the case of google spreadsheet and here the data is untouched since it is sent in the form of blockchain, thus makes it more reliable.
A block in a blockchain is a collection of data and its transaction is propagated by using a flooding protocol called gossip protocol. Once the transaction is validated it is included in a block and is passed on to the network. The blocks in a blockchain is linked cryptographically to other blocks in chronological order where the link is a hash pointer and thus makes a chain where each chain consists of its own unique data and the identity of the previous block. Hence even if the data in a particular block is disturbed or changed, the cryptographic data of the same passed on to the next block of the chain will remain the same and thus will break the chain. The first block in the blockchain is called genesis block.
In case of money transactions, the block is broadcast to every party in the network who approves the transaction if it is valid and the block is added to the chain which provides an ineligible and transparent record of the transactions. Thus the money moves from the sender to the receiver.
Blockchain variants are of two, permissionless and permissioned . In the case of permission-less, anyone can join the network that Blockchain creates and participate in consensus without proving their identity and here proof-of-work is used which is computationally expensive. Bitcoin, Ethereum etc, are such type of variants. On the other hand, permissioned Blockchain like Hyperledger allows only a restricted set of users to have the right to validate the block transactions and only approved actors can participate in consensus.
The first successful electronic cash system invented by a person or a group of people under the pseudonym Satoshi Nakamoto and was released as an open-source software in 2009. Coincidentally, it became the first instance of a successful blockchain. Bitcoin is a peer-to-peer distributed ledger introduced the concept of cryptocurrency (decentralized digital money secured by cryptography) and is being used to create valuable digital assets that cannot be counterfeited. Hence even if a particular node’s history is corrupted, the others stay the same and no authority is indulged in the process since it is decentralized.
Bitcoin is a secure, borderless and trustless system through cryptocurrency where authorizing or processing transactions are done without the need of a financial institution. The members of the bitcoin network are incentivized to participate through cryptocurrency and the incentive is for the people who mint bitcoin, called miners. Bitcoin solves the double-spending problem that existed and also it creates digital assets that can be owned, with proof of ownership. The peer-to-peer network timestamps transactions by hashing them into an ongoing chain of proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.Thus it’s original purpose is to deter dos attacks and network spamming.
The bitcoin protocol or it’s key technical aspects concentrates mainly upon digital signature, the user ‘signs’ all transactions to confirm sender or recipient and the signing algorithm, also known as ‘address’ is the result of public key derived from the user’s private key.
Ethereum- Blockchain 2.0
An extension of blockchain 1.0 into privacy, smart contracts and the emergence of non-native asset blockchain tokens and capability. Ethereum is like a pipe dream and has a built-in Turing-complete programming language introduced into the cyber world by vitalik buterin in 2013. It is an open blockchain platform that lets anyone build and use decentralized applications (dapps) that run on blockchain technology. In 2014 Gavin published ethereum yellow paper.
The Future- Blockchain 3.0
Blockchain of self-governance that serves a huge amount of people by adapting to mainstream applications. Blockchain scaling that improves speed without sacrificing security is another attraction of 3.0.
Breaking a disruptive technology into the market is never easy. Blockchain with its power that cannot be controlled by a single entity along with incorruptible and transparent data, on the other hand, has already marked its signature in the e-world. No single point of failure and no intermediaries and trusted-third parties found in the blockchain system.