Is Blockchain the future?

I am sure you must have heard of the term "Bitcoin" recently, and if you haven't then you are surely missing out on something worth knowing. So, if you want to know about it you can read our post on Bitcoin for getting a good basic knowledge of it.

For those who know what is bitcoin, we will today tell you about the underlying technology behind bitcoin and practically every cryptocurrency out there - The BlockChain.

What is Blockchain?

As the name suggests, a blockchain is simply a chain of blocks. We will shortly discuss what do we mean by a block. A blockchain is a decentralised database in which no single computer is responsible for managing the database but all the computers participating in the network are maintaining the database collectively. Every computer may enter or leave the network without compromising the security and integrity of database.

In a blockchain, each of the nodes ( the computers participating in the network) can build the entire database from scratch for themselves. This means that each node has its own local copy of the database. Blockchain is a very secure way of storing information as even if someone modifies their copy of the database, others can match it with their copy and can easily identify it as a fraud. 

Why Blockchain?

Today most of the systems that are in use are centtralised which means that they are controlled by a single or a group of few members. So, it is highly likely that these organisations who are maintaining the database can modify it by adding fraudulent data or by deleting some data without the users knowing anything about it. It can be argued that why would a reputed organisation do something like this and this is true for most use cases but for situations where the data being stored is too sensitive and the motive to modify it is very enticing then we can't take any risk and allow any single organisation to take complete control. This is where blockchain comes to the rescue by providing a highly secure and immutable database which is accessible by anyone at the same time being practically impossible for anyone to hack it.

How does it work?

Blockchain creates a network of computers (called nodes) in which each node stores a copy of the database, and a set of rules (called the consensus protocol) which define the order in which nodes may make new changes to the database. In this way, all of the nodes agree on a valid state of the database at any time, and no single node has the power to falsify the data. The blockchain also requires that an audit trail of all changes made to the database since the starting is preserved, which allows anyone to verify the correctness of the database anytime.

This audit trail is composed of the individual changes made to the database, and are called transactions. A group of transactions which were all added by a single node on its turn is called a block. Each block contains a reference to the preceding block, which establishes an ordering of the blocks. Therefor the term “blockchain”: it is a chain of blocks, each one containing a link to the previous block and a list of new transactions since that previous block. When a new node joins the network, it starts with an empty database, and downloads all of the blocks, then it applies all the transactions stored in each block to generate a copy of the database that the other nodes have.

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Consensus Protocols 

As mentioned above, the blockchain works on a set of rules known as the consensus protocols. These rules help to maintain a consistent state of the database. One of the main aspects of a consensus protocol are the rules which define how and when new blocks are added to the blockchain. This is important because in order for blockchains to be useful, they must establish an unchangeable timeline of events or changes that have occured in the blockchain, which must be agreed upon by all nodes, so that all nodes can agree on the current state of the database. Moreover, this timeline cannot be subject to censorship, thus no single node may be given the privilege of deciding what enters when. There are currently two main types of consensus protocol: Proof of Work (PoW) and Proof of Stake (PoS).

We will also cover both these protocols in detail sometime in the future but for now we will just give an overview of each of them.

•  Proof of Work - Proof of Work is the original consensus protocol, and is currently used by Bitcoin and many other blockchains.In Proof of Work consensus, the effort required to solve a puzzle is called Work, and a solution is called a Proof of Work. In other words, the fact that I know the solution to the puzzle proves that someone did the work to find that solution. The solution is proof that someone did work. Blockchains which use Proof of Work consensus require such proof for each new block to be added to the chain, thus requiring Work to be done to create new blocks. If someone wants to change the database for their own benefit then he/she must have atleast 51% of the total computing power associated with the chain which is practically impossible, thus making it a very secure way of storing data.
• Proof of Stake - Proof of Stake is a newer consensus protocol which was developed to address some perceived weaknesses in Proof of Work and is currently utilized by Peercoin, BitShares, and several other blockchains. Some of the advantages of Proof of Stake are that no Work is required, thus it requires less energy; the 51% attack is theoretically more expensive; and PoS may encourage a more decentralized network of nodes than PoW. Proof of Stake consensus protocols have more varied rules governing which nodes may create new blocks when than Proof of Work protocols, but in general all PoS protocols specify that block production is controlled by Stake in the blockchain rather than computational power. 

Stay tuned for more posts on cryptocurrency and other latest technology. Meanwhile, let us know what you think about blockchain. Does it have a future? Let us know in the comment section down below !!