What is BlockChain? - a guide for beginners

November 10, 2017

If we think about the current trends, people are fast becoming technology freaks. Where any and every aspect of life has somewhat related itself to the social media. From relationship status to exchange of photographs everything takes place over the internet between two people sitting miles apart from each other. The two people doing this exchange of images or texts or information in general work on mutual trust. There is no third party involved to make this exchange happen. However, when it comes to money, we require the help of a third centralised party to make the transaction. Why? The answer is lack of trust. To make trusting each other easier, BlockChain comes to the rescue.

About BlockChain
Invented by Satoshi Nakamoto in 2008, BlockChain is a technology that can replace the existence of banks in the world today. BlockChain is a digital cryptographic ledger that is decentralised and public. The BlockChain technology was primarily invented to bring bitcoin to the market.

To understand it in an easy manner, blockchain is a technology that can be used by anyone with the access to internet. Conceived primarily to bring bitcoin into the market, this technology has a wide scope in various other fields. Some pointers to understand blockchain:

1.It is a digital and decentralized ledger that holds the information about every transaction that has ever happened over the network

2.The transaction over blockchain isn’t just limited to bitcoin, it can be used for exchanging anything of value including property, goods and other things.

3.Instead of a central party, bank in case of money, the blockchain technology works with authorizing each and every one of the users on its network. Every user on the network can make a transaction on their own.

4.The transaction made, will be recorded in all the ledgers on the network. In this manner, the database of blockchain is not kept in one central location, but is distributed over the network.

How it works:
The transaction over blockchain is a fairly easy concept.One of the benefits of using blockchain is that, it does not have a centralized party controlling the transactions therefore, without much hassle, any transaction can be made overseas.
Let us assume of a transfer of goods happening between A and B. While A is a resident of America, B is the resident of Asia.

1.A initiates transaction of some goods to be transferred to B.

2.A requests the network to execute the transaction. The request is floated in the form of an unauthorized block.

3.This request is received by every user on the network. If all the users identify this transaction as unique, the block is then authorized and linked to the long chain of authorized transactions that have ever taken place on the network.

4.Based on this addition of an authorized block, every user on the network updates their ledger accordingly.

5.Hence, the goods listed in the belongings of A have now been transferred under the belongings of B without the interference of a third party.

Why is it so safe?

The reason why BlockChain is such a groundbreaking idea is not only because of the exclusion of a third party. There are immense benefits of being on the BlockChain network. The trust factor built among the users by the developers of this technology is because of the complex mathematics that comes along with it.

Every user on the network is identified not by his name, but by a public key that is similar to an account number. The blockchain technology authorizes its users by allotting them a pair of public and private keys. Where the public key of a user is visible to everyone on the network, the private key is just visible to the owner. Without the proper pairing of these keys, any transaction is impossible.

The next question that comes in our minds is the security aspect of making a transaction through BlockChain. Is it possible to make a transaction, get the goods delivered and then make a reverse transaction? So that the person on the other side neither has money nor goods? The answer to it is a NO. In order to get your block authorized, the CPU of the sender needs to solve a very complex algorithm. The algorithm is complex enough for your computer to take a couple of minutes before it has the answer. The working of the BlockChain network is slower than the other functions working on internet because of this authorisation step.

Since it takes your computer a couple of minutes to solve one algorithm, it is highly unlikely that it would be able to solve two algorithms before anybody else on the network solves it. Given that there are millions of users currently on the network. This is how this technology works flawlessly. Also, because there is no centralised database for the BlockChain network, it is safe from the hackers. In the case of a band, the hacker can break into the official website of a bank and get access to all the money there. However, in the case of BlockChain, every user on the network has a ledger on his computer with all the data. Hacking millions of computers at once is impossible and hence the security of BlockChain.

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