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Print Posted on 08/30/2017 in Blockchain

What is Blockchain ?

What is Blockchain ?

Blockchain is a public ledger of all cryptocurrency transactions that have ever been executed. It is a distributed ledger that records transactions between two parties in a permanent and verifiable manner. 

What Makes a Blockchain

A blockchain is made up of a continuously growing number of records known as blocks which are linked and secured using cryptography. Each block is made up of transaction data, a timestamp and a hash pointer that acts as the link to the previous block. It is managed by a peer-to-peer network that adheres to a common protocol for validating new blocks. A transaction cannot be altered retrospectively unless all subsequent blocks are altered and with the consent of a majority in the network. Participants can verify and audit the transactions with little expense. 

Authentication of Transactions

Transactions recorded on blockchain are authenticated through mass collaboration motivated by collective self-interests. The use of blockchain eliminates infinite reproducibility of digital assets by confirming that each unit of value was transferred only once. This characteristic has solved the long standing problem of double spending that has long been associated with digital assets. 

Contents of a Block

There are two kinds of records in a blockchain record; transactions and blocks. Blocks contain valid transactions which are hashed and encoded into a Merkle tree. Additionally, a block contains the hash of the previous block in the blockchain linking the two blocks.  This format has been used previously, though in different variants such as Git. The linked blocks form a chain with the iterative process confirming the integrity of the previous blocks back to the original block. New blocks are formed as frequently as every five seconds, therefore, increasing the size of the blockchain. 

Temporary Fork and Orphan Blocks

When two separate blocks are produced concurrently, a temporary fork is created. A blockchain has both a secure hash based history and a specified algorithm used to score various versions of history and select the one with the highest value. The blocks that are not selected for inclusion in the chain are known as orphan blocks. It should be noted that peers supporting the database may not have exactly the same version of history at all times, therefore, they keep the highest scoring version of the blockchain that they currently know. A peer overwrites his version of the database whenever he receives a higher scoring version, usually the previous version with an additional block. He then transmits the improved blockchain to the rest of the peers. 

Permanence of Entries

There is never a guarantee that any particular entry will remain in the best version of the history forever. However, blockchains are built to add a score of new blocks to old blocks and that a miner is rewarded for adding a new block and not overwriting an old one. Consequently, the probability of a block being overwritten diminishes as more blocks are added onto it.  


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