History of Blockchain Technology
The blockchain technology described in 1991 by the research scientist Stuart Haber and W. Scott Stornetta. They wanted to introduce a computationally practical solution for time-stamping digital documents so that they could not backdated or tampered. They develop a system using the concept of cryptographically secured chain of blocks to store the time-stamped documents.
Why was this technology even introduced?
- To remove power from central authority
- Prevent fraud
- To have more transparency
- To have immutable records
What is Blockchain?
Blockchain, a chained link of blocks where in each block contains data and those blocks linked together via cryptography and in a chronological order.
Why is it called a Decentralized technology?
Since the complete list of data stored in the blockchain is not in control of any central authority but is like a distributed public ledger which anyone and everyone can have a copyof.
What all major information stored in a block of Blockchain Technology?
- Data e.g. transaction information in case of Bitcoin
- Hash of the current block : Cryptographically aggregated transaction information of the block
- Hash of previous block
How is it secure?
Since every block contains the hash of the previous block, in order to make change in any one of the blocks the hacker will have to make changes to every other previous block as well, which is next to impossible & that’s how it is secured.
How does a transaction goes through in Blockchain Technology?
- Transaction is sent to the network
- All the nodes gets notified who then start solving a complex mathematical puzzle
- Whoever solves it first let the rest of the nodes know who then start validating it
- If at least 50% nodes validate it to be true, the transaction is added to blockchain & the node who solved it is rewarded with crypto
- The nodes who participate in solving the puzzle called “Miners”
- Also, once the information added it can never removed or edited
Proof of Work (PoW):
Proof of work (PoW) describes a system that requires a not insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, such as sending spam emails or launching denial of service attacks. The concept subsequently adapted to securing digital money by Hal Finney in 2004 through the idea of “reusable proof of work” using the SHA-256 hashing algorithm.
Following its introduction in 2009, Bitcoin became the first widely adopted application of Finney’s PoW idea (Finney was also the recipient of the first bitcoin transaction). Proof of work forms the basis of many other cryptocurrencies as well, allowing for secure, decentralized consensus.