What Is Blockchain?
A blockchain is a growing list of records, called a block, which is linked using cryptography. Each block has a cryptographic hash of the previous block, a timestamp and transaction data. The guy’s Blockchain these days are entirely in the discussion. And this is primarily because it is the bit to one of the most famous cryptocurrencies in the world. Bitcoin Many governments and leading banks have decided to bring many traditional transactions based on the Blockchain concept. The application and capacity of this framework are extensive, and it is believed the method of operation is changing in different domains.
In recent years, there is a lot of discussion on Blockchain. Many people described it as the most disruptive technologies of the decade. In particular, financial markets can be the most affected. The technology is being changed many verticals such as healthcare, medicine, insurance, smart properties, automobiles, and even governments.
However, the most successful implementation of Blockchain till now is Bitakouine – A Peer-to-Peer Electronic Cash System, which is coincidentally the first implementation of blockchain technology. In this way, to understand the blockchain technique, it is best to know how the bitcoin system is design and implemented. In this article, you will learn how Blockchain, its architecture, how it is applied, and its various features. I will list the bitcoin implementation describing Blockchain’s complexities.
Blockchain architecture is not so insignificant, and many have written useful articles, tutorials, including many videos. These include listener from novice to professional. In this article, I will focus on the conceptual understanding of the blockchain architecture, keeping in mind Novice and Professionals. Before going to Blockchain, it is essential to know why they need for this new technology has come up.
Blockchain Double Spending
Suppose Raju is paying a $ 10 bill to Mohan in exchange for a book. Once Mohan receives this physical $ 10 bill, then Raju has no way to use this money again for some other transaction because the physical currency is now in possession of Mohan. Now, consider the situation where the money is paid in digital form.
As the currency exchange format is in digital format, it is essentially a binary physical file stored on Raju’s device somewhere. After this file gives digital money to Raju Mohan, he can also give Alice a copy of the data. Both now think that they have got money because of no means of certifying digital coins and in this way they will distribute their goods to Raju. This is called double-expenditure, where the sender spends the same money in more than one place to get the services or products from many vendors.
To solve this problem of double-spending, will appoint a centralized authority to monitor all transactions
Centralized Authority, which is your bank in general terms, keeps bookkeeping all the transactions registered. Now, Raju will have to send his digital money to the bank, who will enter his account book in Raju’s account. After ensuring that Raju has enough balance to pay for the digital money that he wants to send, he will send money to deposit Mohan to his account in his account.
Now, it is a guarantee that Raju can not double the money. If every digital transaction is routed through such a centralized authority, then the problem of double expenditure will be solved. Each coin received in this transaction provides another benefit in certifying the authenticity of digital money. So duplicate money payment will be easily detected and preventable by using a copy of Alice in the case of Raju.
Introduction of the Centralized Authority Although it solves the problem of double-spending, another vital issue introduces – The cost to create and maintain central Authority.
As banks require funding for their operations, they start cutting commissions on each currency transaction for their customers. This can sometimes be very expensive, especially in foreign transfers of money where many agents (banks) can join the whole deal.
All the above issues are resolved by introducing a digital currency named Bitcoin. Now I will give you a brief overview of what bitcoin is in its design and architecture.
As the account book that records all bitcoin transactions is made public, privacy is at stake. Anyone in the world will be able to know who paid. The traditional banking system can maintain such confidentiality keeping its records confidential.
Privacy is achieved by a different strategy in the Bitcoin System. Note that we said that the sender of a bitcoin needs to know who to pay. That is why he asks for the public key of the seller to whom he wishes to make a payment. This public key can be anonymous.
In this sense, as a seller of some services, when someone asks you where to send the payment, you will just send it to your public key. This public key is not recorded anywhere with you in the book. In this way, anyone outside this transaction will know how much money is transacted and what public money is paid from.
To get a higher level of privacy for each transaction, you can generate a new private, public key for each sale so that many of the purchases you make can not be grouped by a third party. For an outsider, this would mean that many transactions of small values were secured and they would never be linked to a general source.
In the end, any online internet-based system is vulnerable to abuse. Now I will describe some potential types of attacks on the bitcoin system and how they can be reduced.