In the simplest terms, Blockchain can be described as a data structure that holds transactional records and while ensuring security, transparency, and decentralization. You can also think of it as a chain of records stored in the forms of blocks which are controlled by no single authority.
What Is Blockchain and
What Does it Look Like?
Fundamentally,
the blockchain is aptly named: it is a chain of blocks of data which at their
most basic level (at least in most current implementations) can be conceptualized
as something similar to the diagram below, which is based on the blockchain as
famously implemented by Bitcoin.
A database
is a collection of information that is stored electronically on a computer system.
Information, or data, in databases is typically structured in table format to
allow for easier searching and filtering for specific information. What is the
difference between someone using a spreadsheet to store information rather than
a database?
Spreadsheets
are designed for one person, or a small group of people, to store and access
limited amounts of information. In contrast, a database is designed to house
significantly larger amounts of information that can be accessed, filtered, and
manipulated quickly and easily by any number of users at once.
A
cryptocurrency is a digital or virtual currency that is secured by
cryptography, which makes it nearly impossible to counterfeit or double-spend.
Many cryptocurrencies are decentralized networks based on blockchain
technology—a distributed ledger enforced by a disparate network of computers. A
defining feature of cryptocurrencies is that they are generally not issued by
any central authority, rendering them theoretically immune to government
interference or manipulation.
First and
foremost, try to think of cryptocurrencies as applications that use Blockchains
for storage. Equally, remember that cryptocurrencies could conceivably be based
on any of the above fault tolerance approaches: Proof of Work, Proof of Stake,
or PBFT although in reality, all major implementations are either PoW or PoS
based at the time of writing.
Mining
Chances are
you hear the phrase “Bitcoin mining” and your mind begins to wander to the
Western fantasy of pickaxes, dirt, and striking it rich. As it turns out, that
analogy isn’t too far off.
Bitcoin
mining is performed by high-powered computers that solve complex computational
math problems; these problems are so complex that they cannot be solved by hand
and are complicated enough to tax even incredibly powerful computers.
As we
previously discussed, certain currencies being minable is a result of their use
of Proof of Work fault tolerance. As an inducement to perform the intensive
calculations required by the PoW approach, the first person to successfully
generate a valid hash first which is subsequently accepted by the network is
rewarded with either the transaction fees included in that block (generally the
pieces of a single ‘coin’ included in a transaction after a certain number of
decimal places) and/or a new coin in the currency.
We hope you have
found this article informative and interesting. For more information or queries
contact us to know more about this technology.
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