Let us discuss today why Blockchain was introduced:
The reason why Blockchain was introduced was:
- Inflating Currencies
- Depreciation of currency values
- Fractional Reserve Banking
- Inflation Issues
- Random Bailouts
What is Blockchain:
Blockchain is a distributed system that operates on a peer-to-peer network, and transactions are recorded across multiple entities for data security and transparency. They are making use of cryptographic techniques for verification and the addition of new Blocks
Hashing:
Hashing is the process of taking inputs and converting them into 256-bit (32 bytes) data as output
Properties of Hashing:
- Deterministic: The same input will produce the same output.
- Fast Computation: The Hash value can be quickly verified
- Pre-Image Resistance: Difficulty in reversing the hash function with given output
- Small changes in input produce large Changes in output: Tiny changes in input produce the larger changes in output.
- Collision Resistance: Difficult to find an input that produces the same output.
Blocks:
- Data are stored in blocks
- Each block contains transactions, a timestamp, and a cryptographic value
- Each blocks are chained together and has the value of the previous blocks, hence they are named as: Blockchain
Important terms to remember:
Nonce: It starts with 0s, and it is used only once by miners to solve the complex blockchain problems.
Miners and Compute Power:
- Miners are the one who produces blocks in the blockchain
- And they require computing power to produce the next block.
Consensus Mechanism
- A method ensuring all participants agree on the blockchain's state and the validity of transactions.
Acts as a rulebook for validating transactions and blocks.
Proof of Work (PoW)A consensus mechanism used in blockchain networks.
Requires solving complex mathematical problems to find the correct nonce.
Ensures the security and integrity of the blockchain by validating transactions and adding new blocks.
Top comments (1)
Great breakdown! Amazing to see how these core blockchain concepts now power things like on-chain AI. Exciting times ahead.