Nowadays, you might have heard of terms like Web3, Blockchain, Bitcoin, DogeCoin, Cryptocurrencies, NFTs, Decentralised applications (Dapps) and what not on the internet. These might be totally new terms for most of y’all or maybe they are not. Either ways, this brief article is solely intended for you to understand the foundational framework (base) of these new emerging technologies.

1. What is a Blockchain?

It all starts with a blockchain. All of these new terms popping up in the digital world are built on this basic framework called the Blockchain. But what exactly is a Blockchain?

A blockchain is a decentralised digital network or a distributed public ledger that enables us to complete peer-to-peer transactions directly, efficiently and securely at a faster speed.

Confused? Let’s break this down into two parts.

a. Meaning of blockchain (first line of definition)

Blockchain is a public list of records (a public ledger) that is shared among the nodes of a computer network (this makes it a distributed or decentralised network). It stores information in batches called blocks. These blocks are linked together to form a continuous line. A chain of blocks. A blockchain. Each block is like a page of a record book.

b. Functionality of a blockchain (second line of definition)

What separates the blockchain from a normal data storage system (database) is its immutability. The data in a blockchain cannot be altered. It works as an immutable (unchangeable) record of transactions that does not require you to rely on any external authority like banks, governments, large corporations to validate the authenticity and integrity of the data. This lowers the use of intermediaries, which in turn fastens the transaction time, making it “peer-to-peer”.

Let’s take an example. Say you want to transfer $100 to your friend. To complete this transaction you will need to transfer your money through a bank, which requires you to go through an authentication process before sending it. This slows down your transaction process. But at the same time, it is necessary for you to go through the authentication procedure to avoid any scams or terminate transactions that you were not aware of. This is where blockchain comes in. A more secure and faster alternative.

2. How does it work?

Blockchain uses cryptography to keep your data extremely secure. Each block contains a cryptographic hash of the previous block, a unique hash for itself, a timestamp and transaction data. As blocks each contain information about the block previous to it, they form a chain, with each additional block reinforcing the ones before it. However, if a block is altered, its hash changes, causing the following blocks to become invalid. Therefore, blockchains are resistant to data modification because once recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.

But that alone does not ensure the security of the blockchain as it is possible to tamper a block and recalculate the hashes of the subsequent blocks using super-fast computers. To make the blockchain more secure, there is a consensus mechanism known as “Proof-of-work”. This mechanism slows down the creation of new blocks (let’s assume 10 minutes), allowing the people on the network to validate them and reach to a consensus.

Now if someone tries to tamper with a block, not only do they need to recalculate the proof-of-work for the subsequent blocks but also need to be validated by the people on the network. Thus, if the block is tampered, it is rejected by the people on the network. But if a block is valid, it is added to the previous (most recent) validated block on the blockchain.

Conclusion

With the help of decentralisation and cryptography, blockchain technology has created a solid framework that is almost impossible to toy with. Being fast, secure and scalable, it has opened up a more secure world for us as well as generated countless possibilities and applications that can have a positive impact on numerous sectors around the world.

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