Blockchain 101 Series 1

Blockchain

A blockchain is a decentralized, digital ledger that records transactions on multiple computers, called "nodes," in a network. Each block in the chain contains a record of multiple transactions, and once a block is added to the chain, the data it contains is considered to be unchangeable.

The decentralized nature of a blockchain means that it is not controlled by a single entity, such as a government or financial institution. Instead, it is maintained by a network of users, who collectively ensure the integrity and reliability of the data contained within the chain.

One of the key features of a blockchain is its ability to provide a secure and transparent record of transactions. Because the data in a blockchain is distributed across multiple nodes and can only be added to the chain through a complex, cryptographic process called "mining," it is extremely difficult to alter or tamper with the data once it has been recorded. This makes it an attractive technology for a wide range of applications, including financial transactions, supply chain management, and the issuance and tracking of non-fungible tokens (NFTs).

Changing data

It is not strictly "impossible" to change the data in a blockchain, but it is challenging and requires significant computing power and resources.

One of the key features of a blockchain is its ability to provide a secure and immutable record of transactions. This is achieved through the use of cryptographic hash functions, which take an input of any size and produce a fixed-size output, called a "hash." Each block in a blockchain contains a hash of the previous block, creating a chain of hashes that can be used to verify the integrity of the data contained within the chain.

If someone were to try to alter the data in a block, the hash of that block would change, and the change would be propagated to all subsequent blocks in the chain. This would require the attacker to not only alter the data in the original block but also recalculate the hash of every block after it, which would be a computationally intensive task.

Additionally, most blockchains are decentralized, meaning that they are maintained by a network of nodes rather than a single entity. In order to successfully alter the data in a blockchain, an attacker would need to control a significant portion of the network and have the resources to out-compute the other nodes in the network. This makes it practically infeasible for an attacker to alter the data in a blockchain successfully. The following example may help you better understand this topic.

1. Let's assume there are 100 miners working on block 30.
2. However, there is one miner who wants to change a transaction in block 18.
3. This one miner would have to make their changes and redo all the transactions for blocks 18-29 and of course, block 30. That's 13 blocks of expensive computing.
4. What makes it even harder is that one miner has to finish making his changes before the other 99 people on the network finish just one block. If he fails, he will have to start again at block 18. Every time he fails, he will have to change an extra block. It's really impossible.

Smart contract

What is a smart contract?

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein are stored and replicated on a blockchain network.

Smart contracts allow for the automation of certain processes and can be used to facilitate, verify, and enforce the negotiation or performance of a contract. They can be used to represent a wide range of assets, including financial instruments, real estate, and even personal relationships.

One of the key benefits of smart contracts is that they can help to reduce the need for intermediaries and increase the efficiency of certain processes. They can also help to reduce the risk of fraud or errors, as the terms of the contract are enforced automatically.

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