This article I'm going to cover Blockchain, I'm going to go into as much detail as possible about how this technology works in the real world, and more important details. Due to my reading of the sources at the end of this post, I realized that I won't be able to go into as much detail as I wanted, blockchain is a very extensive and complex subject, I'll have to explain each subject on the map in other posts, in short I'll have to dissect this post into several. I'm not going to talk about its history because there's already a previous post, but I feel that my time has come to deepen my knowledge of this world of "blockchain".
Reading map:
- How does Blockchain work?;
- What are the advantages of using blockchain?
- Blockchain's Main Characteristics
- Find out about 5 applications of blockchain in companies
- What are the types of blockchain networks?
- Conclusion
How does Blockchain work?
A blockchain is “a distributed database that maintains a continuously growing list of ordered records, called blocks.” These blocks “are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.
What are the advantages of using blockchain?
The main advantage of using blockchain is the security that this system provides for transactions, since the registration and storage of data is encrypted in a block inserted into the network.
In addition, because it is decentralized, the information stored in these blocks is more secure from hacker attacks, as there is not just one point of failure that can be exploited by criminals, which also guarantees privacy.
Other advantages of blockchain are transparency and open access.
Creating Transactions: A blockchain transaction shows the movement of physical or digital assets from one party to another on the blockchain network. It is recorded as a block of data that includes details such as these:
- Who was involved in the transaction?
- What happened during the transaction?
- When did the transaction take place?
- Where did the transaction take place?
- Why did the transaction take place?
- How much of the asset was exchanged?
- How many preconditions were met during the transaction?
Verification and Validation: There are three ways in which validation takes place within a blockchain network. Note that in all of them the word “proof” appears: this is because everyone, each in their own way, needs to prove something for validation to take place.
- Proof of Work ou PoW
- Proof of Stake ou PoS
- Proof of Authority ou PoA
Block formation: A validator is a participant in a blockchain network who has the task of verifying new blocks of transactions and adding them to the chain, with the incentive to perform this task being the earning of rewards in cryptocurrencies.
Consensus and Chain Addition: A consensus mechanism is the programming and process used in blockchain systems to reach a distributed agreement on the state of the ledger or a set of data. Cryptocurrencies, blockchains and distributed ledgers benefit from their use because consensus mechanisms replace much slower and sometimes inaccurate or unreliable human verifiers and auditors.
Immutability and Security: they are secure because they are designed to be transparent and immutable through consensus mechanisms and cryptographic keys. However, blockchain networks and blockchain members, including nodes, are vulnerable to certain types of cyber attacks.
Blockchain's Main Characteristics
- Decentralization
- Transparency and Security
- Immutability and Trust
Find out about 5 applications of blockchain in companies
There are more applications, but I'm only going to comment on these five, otherwise the post will be too long to read.
- Transition validation
- Smart contracts
- Payment system
- Cloud storage
- Supply Chain
What are the types of blockchain networks?
There are four main types of decentralized or distributed networks on the blockchain:
Public blockchain networks
Public blockchain networks do not require permission and allow everyone to participate. All blockchain members have equal rights to read, edit and validate the blockchain. People use public blockchains to exchange and mine cryptocurrencies such as Bitcoin, Ethereum and Litecoin.
Private blockchain networks
A single organization controls private blockchains, also called managed blockchains. The authority determines who can be a member and what rights those members will have on the network. Private blockchains are only partially decentralized, as they have access restrictions. Ripple, a digital currency exchange network for businesses, is an example of a private blockchain.
Hybrid blockchain networks
Hybrid blockchain networks combine elements of public and private networks. Companies can set up a private, permission-based system alongside a public one. In this way, they control access to specific data stored on the blockchain, while keeping the rest of the data public. They use smart contracts to allow members of the public to verify that private transactions have been completed. For example, hybrid blockchains can grant public access to digital currencies, while bank-owned currencies are kept private.
Consortium blockchain networks
A group of organizers control the consortium blockchain networks. Pre-selected organizations share responsibility for maintaining the blockchain and determining data access rights. Sectors in which organizations have common goals and which benefit from shared responsibility usually prefer consortium blockchain networks. For example, the Global Shipping Business Network Consortium is a non-profit blockchain consortium that aims to digitize the shipping industry and increase collaboration between shipping industry operators.
Conclusion
Blockchain can no longer be treated as a trend, but as a new reality of a technology that was the milestone for the evolution of the web, which is now known as Web 3.0. In it we have decentralization, where it takes control away from the big techs and passes it on to the users, security because it is impossible to change a block, without changing the previous ones and with that it is immutable that there is no way to change and therefore it becomes very safe. Web 3.0 is the path to a safer and more reliable internet, which is why I'm riding this wave every day.
Sources:
https://www.blackduck.com/glossary/what-is-blockchain.html
https://www.acolabam.com.br/blog/como-usar-blockchain
https://pt.wikipedia.org/wiki/Blockchain
https://en.wikipedia.org/wiki/Blockchain
https://aws.amazon.com/what-is/blockchain/?nc1=h_ls
https://blog.bitso.com/pt-br/tecnologia/o-que-validacao-blockchain
https://www.acolabam.com.br/blog/como-usar-blockchain
https://www.investopedia.com/terms/c/consensus-mechanism-cryptocurrency.asp
Image source: https://wallpaperaccess.com
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