What Is Blockchain Technology? Blockchain For Beginners!!

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Blockchain Technology
Blockchain Technology

Blockchain technology is an ever-growing digital list of data records. This list includes many data blocks that are organized chronologically and are linked and protected by cryptographic tests.

The first prototype of the blockchain technology dates from the early 1990s when computer scientist Stuart Haber and physicist W. Scott Stornetta used cryptographic methods in a series of blocks to protect digital documents from data fraud.

The work of Haber and Stornetty certainly inspired the work of Dave Bayer, Hal Finney, and many other computer scientists and cryptography enthusiasts, which ultimately led to the creation of Bitcoin as the first decentralized electronic money system (or just the first cryptocurrency). The white paper on bitcoins was published in 2008 under the pseudonym Satoshi Nakamoto.

Although blockchain technology is older than bitcoin, it is a fundamental component of most cryptocurrency networks, acting as a decentralized, distributed and publicly accessible digital book that is responsible for maintaining a constant record (chain of blocks) of all previously confirmed transactions.

Blockchain transactions occur in a globally distributed peer-to-peer computer network (nodes). Each node manages a copy of the blockchain and contributes to the operation and security of the network. This is what makes Bitcoin decentralized digital currency without borders, resistant to censorship and does not require the mediation of third parties.

Being a DLP (distributed ledger) technology, the blockchain is specifically designed to provide high resilience to change and fraud (such as double costs). This is true because the bitcoin chain, like the record database, cannot be changed and cannot be forged without an inaccurate amount of electricity and computing power — which means that the network can use the concept of original digital documents “Creating every Bitcoin is truly unique and not a replicated form of digital currency.

The so-called consensus algorithm Proof of Work is what made it possible to create Bitcoin as a Byzantine Fault Tolerance (BFT), which means that its blockchain technology is able to work continuously as a distributed network, although some participants (nodes) present dishonest behavior or inefficient functionality. Proof of Work consensus algorithm is an important element of the bitcoin mining process.

Blockchain technology can also be adapted and implemented in other activities, such as healthcare, insurance, supply chain, IOT, and so on. Although it is designed to function as a distributed register (in decentralized systems), it can also be implemented in centralized systems as a way to ensure data integrity or reduce operating costs.

History of Blockchain Technology

The idea of ​​the blockchain technology was described back in 1991 when research scientists Stuart Haber and W. Scott Stornetta presented a computationally practical solution for printing digital documents so that they cannot be retroactively or counterfeited.

The system used a chain of cryptographically protected blocks to store documents with time stamps, and in 1992 Merkle trees were included in the project, which made it more efficient by allowing several documents to be collected in one block. However, this technology was not used, and the patent expired in 2004, four years before the start of Bitcoin.

Reusable Proof of Work

In 2004, a computer scientist and cryptographer Hal Finney (Harold Thomas Finney II) introduced the RPoW system, Reusable Proof Of Work. The system worked by receiving a non-interchangeable or non-interchangeable working token based on Hashcash but instead created a token signed by RSA, which could then be transferred from person to person.

RPoW solved the problem of double costs by retaining ownership of tokens registered on a reliable server, which allows users around the world to verify their accuracy and integrity in real time.

RPoW can be considered as an initial prototype and a significant step in the history of cryptocurrency.

Bitcoin network

At the end of 2008, a person representing the pseudonym Satoshi Nakamoto was included in the cryptographic mailing list, a cryptographic mailing list including a document representing the decentralized peer-to-peer electronic payment system – Bitcoin.

Based on the Hashcash proof algorithm, but instead of using the hardware trusted computing function, such as RPoW, Bitcoin cost double protection was provided with a decentralized peer-to-peer protocol for monitoring and verification. transactions. In short, bitcoins are “retrieved” for remuneration using the labor testing mechanism of individual miners, and then they are checked by decentralized nodes in the network.

January 3, 2009 Bitcoin showed up when Satoshi Nakamoto, who received an award of 50 bitcoins, got the first block of bitcoins. The first recipient of bitcoins was Hal Finney, he received 10 bitcoins from Satoshi Nakamoto as part of the first bitcoin transaction in the world on January 12, 2009.

Ethereum

In 2013, Vitalik Buterin, a programmer and co-founder of Bitcoin magazine, said that Bitcoin needs a scripting language to create decentralized applications. Not reaching an agreement in the community, Vitalik began to develop a new distributed computing platform based on the blockchain, Ethereum, which implements the possibilities of scenarios, called smart contracts.

Intellectual contracts are programs or scripts that are implemented and executed on the Ethereum blockchain. They can be used, for example, to complete a transaction under certain conditions. The intelligent contracts are written in certain programming languages ​​and compiled into bytecode, which can then read and execute a complete Turing virtual machine, called the Ethereum Virtual Machine (EVM).

Developers can also create and publish applications running in the Ethereum blockchain. These applications are usually called DApp (decentralized applications), and hundreds of DApps are already running in the Ethereum blockchain, including social networking platforms, gaming applications, and financial exchanges.

Ethereum cryptocurrency is called Ether, it can be transferred between accounts and is used to pay commissions for the computing power used when executing intelligent contracts.

Today, blockchain technology attracts much attention and is already used in various applications, not limited to cryptocurrencies.

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