What is Blockchain?

Blockchain sounds complex, and it can undoubtedly be, but its fundamental idea is simple. A blockchain is a database type. It helps to understand what a database is to comprehend Blockchain.


A database is a collection of data that is saved on the computer system electronically. Information or data is usually organized in table style in a database so that certain information may be searched and filtered quickly. What's the difference between someone who uses a table instead of a database to store data?


Spreadsheets are intended to store and retrieve modest information for one person or a small number of individuals. In contrast, a database is intended to accommodate much more information available quickly and readily for any number of people to access, filter, and modify.

This is achieved by housing data on servers built from powerful processors. Large databases. These servers may occasionally be created with hundreds or thousands of computers to allow many people to concurrently access the database by having the processing power and storage capacity. Although a table or database is available to any number of individuals, it is typically the company's property. It is administered by a designated person who has full authority over its operation and the data inside it.


So how is the Blockchain, unlike a database?



Structure of storage

The structuring of the data is a significant distinction between a standard database and a blockchain. A blockchain gathers information in groups that include sets of information, often known as blocks. Blocks have specific storage capabilities and are linked onto the previously entire block, creating a chain of data known as the Blockchain when it is filled. All additional information that follows is assembled into a newly-formed block that is then added to the chain after it is complete.



A database organizes its data in tables, whereas a blockchain arranges its data in chunks (blocks) linked together, as its name suggests. This allows all blockchains to be databases but not all databases to be blockchains. This method also provides an irreversible schedule of data when applied in a decentralized way. When a block is filled, it is put into stone and is included in this schedule. When added to the chain, every block in the chain is assigned a precise timestamp.



Decentralization

To comprehend Blockchain, it is helpful to see how Bitcoin has been implemented. Like a database, Bitcoin requires a computer collection to keep its Blockchain. For Bitcoin, this Blockchain is just a certain kind of database that records each Bitcoin transaction. In the case of Bitcoin, and unlike other databases, these computers are not all under a single roof. A single person or organization operates each computer or set of computers.



Imagine a business owning a server with 10,000 machines with a database that has all the account information of its clients. This business has a warehouse with all these computers under a single roof and has complete control of each machine and its data. Likewise, Bitcoin consists of thousands of computers. Still, every computer or group that stores its Blockchain is located in a different geographical area and is managed by individuals or groups of persons. These machines, which form the network of Bitcoin, are called nodes.



In this approach, the Blockchain of Bitcoin is utilized decentrally. However, there are private, centralized blockchains that own and run the machines of your network.



Each node in a blockchain contains a complete record of the data recorded from its genesis on the Blockchain. Data are the whole history of all Bitcoin transactions for Bitcoin. If a node has a mistake in its data, it may utilize thousands of other nodes to fix it. In this manner, no network node may change the information contained in it. As a result, the history of transactions in each Bitcoin block is irreversible.



If one user tampers Bitcoin's transaction record, the other nodes would cross-refer and mark the node with the wrong information. This method contributes to a proper and visible sequence of occurrences. In Bitcoin, this information is a record of transactions. Still, a blockchain may also contain a wide range of information such as legal contracts, state identifications, or goods inventories of a business.



A majority of the decentralized network computer power has to agree on these modifications to alter how the system functions or stores information. This guarantees that any adjustments are made in the best interests of the majority.

 

Related: What is cryptocurrency?



Transparency

 

Due to Bitcoin's decentralized Blockchain, all transactions may be openly seen by either owning an individual node or utilizing blockchain explorers that enable anyone to witness current transactions. Each node has a copy of the chain updated by confirming and adding new blocks. That means you can follow Bitcoin wherever it travels if you choose.



For instance, exchanges were hacked in the past, when Bitcoin's holders lost everything. Although the hacker may be completely anonymous, the Bitcoins taken can be readily traced. It would be known if the bitcoins seized were to travel or spend someplace in any of these breaches.


Is Blockchain safe?

 

Blockchain technology is responsible for security and trust problems in several ways. First, new blocks are always kept chronologically and linearly. That is, the "end" of the Blockchain is constantly added. If you look at Bitcoin's Blockchain, you will notice every block has a "height" location in the chain. The height of the league has reached 656,197 blocks by November 2020.



After adding a block to the end of the Blockchain, it is impossible to go back and change the block content unless the majority is in agreement. Each block includes its hash, the preceding block's hash, and the time stamp above. Hash codes are generated by a math function that transforms digital information into a number and letter string. If this information is changed, the hash code also changes.



This is why it's essential for safety. Let's suppose a hacker wants to change the blockchain and rob Bitcoin of everyone else. If they altered their copy, they would no longer match everyone else's copy. If everyone else cross-references their documents, the one copy will stand out, and the hacker's chain version is portrayed as unlawful.



In such a breach, the hacker should simultaneously check and modify 51 percent of blockchain copies to make their new copy the majority copy and the chain agreed upon. Such an assault would also demand huge funds and resources since they would have to replace all the blocks because they now have different timestamps and hash codes.



Because of the scale of Bitcoin's network and how quickly it is expanding, the cost of extracting such a feat seems unbelievable. This would not only be very costly but probably also useless. Doing so would not go undetected since network members would witness such dramatic changes to the Blockchain. The network members would then switch to an unimpacted fresh version of the chain.



This would lead the attacked version of Bitcoin to fall in value, rendering the attack useless because the bad actor controls a worthless asset. The same would happen if the bad actor attacked the next Bitcoin split. It is designed to encourage participation in the network much more cheaply than to attack it.

 


Bitcoin vs. Blockchain


Blockchain aims to enable the recording, distribution, and non-editing of digital information. Stuart Haber and W. Scott Stornetta, two academics who had intended to create a system where document timestamps could not be altered, originally described Blockchain technology in 1991. But almost two decades later, when Bitcoin was launched in January 2009, Blockchain had its first real-world use.



The Bitcoin protocol is Blockchain-based. The pseudonymous inventor of Bitcoin, Satoshi Nakamoto, described this as "a new electronic cash system with no trusted third party, which is completely peer-to-peer."



The idea here is that Bitcoin utilizes Blockchain as a method of recording a payments ledger openly. Still, Blockchain may, in principle, be used to store any amount of data points without changing. As said, this may include transactions, election votes, goods inventories, government identifications, house deeds, and much more.



Currently, there are many blockchain initiatives aimed at using Blockchain in ways that support society other than documenting transactions. One excellent example is that Blockchain is utilized in democratic elections as a method of voting. The nature of the immutability of Blockchain implies that fraudulent voting becomes more challenging.



For example, a voting system might operate such that a separate cryptocurrency or token would be created for each nation's citizen. Each candidate would then get a particular wallet address, and the voters would transmit their token or cryptograph to the address of the candidate they want to vote for. Blockchain's public and traceable nature would remove the need for human votes and the potential of bad actors to manipulate physical ballots.