Working of Blockchain

Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

It works by creating a chain of blocks, each containing a cryptographic hash of the previous block, a timestamp, and transaction data. The chain is maintained by a peer-to-peer network of computers, each of which verifies the data and adds new blocks to the chain. This makes it impossible to modify the data once it is stored. Blockchain provides a secure, distributed, and an immutable way to store and transfer data, making it ideal for applications such as cryptocurrency and smart contracts.

Now , The transaction process in a blockchain can be summarized as follows:

1. Facilitating a transaction: A new transaction is added to the blockchain network. Using public and private keys, all the data that needs to be communicated is double encrypted.
2. Transaction verification: The transaction is then transmitted to the network of peer-to-peer computers distributed across the world. Every node on the network will verify the transaction's legitimacy, including if there is enough balance available to complete the transaction.
3. Formation of a new block: A blockchain network typically has several nodes, and numerous transactions are validated simultaneously. The transaction will be included in the mem pool once it has been confirmed as valid and notified so.
4. Consensus Algorithm: To make a block permanent, the nodes that make up the block will attempt to add it to the blockchain network. Only a valid block is safely attached to the blockchain, and the nodes employ a consensus mechanism to make sure that every new block added to the blockchain is the one and only version of the truth that is accepted by every node in the network. The node that is selected to add a block to the blockchain will get a reward and hence we call them “miners”.
5. Addition of the new block to the blockchain: The newly produced block is now ready to be added to the blockchain after receiving its hash value and being authenticated. In every block, there is a hash value of the previous block and that is how the blocks are cryptographically linked to each other to form a blockchain. A new block gets added to the open end of the blockchain.
6. Completion of Transaction: As soon as the block is added to the blockchain the transaction is completed and the details of this transaction are permanently stored in the blockchain. Anyone can obtain the transaction's information and confirm the transaction.

A block contains various information or data which is necessary for the system for the transactions that occur over blockchains. All of these are essential, and it ensures that a secure, distributed, and immutable way to store and transfer data is formed.?

These are as follows :

Header: It is used to identify the particular block in the entire blockchain. It handles all blocks in the blockchain. A block header is hashed periodically by miners by changing the nonce value as part of normal mining activity, also Three sets of block metadata are contained in the block header.

Previous Block Address/ Hash: It is used to connect the i+1th block to the ith block using the hash. In short, it is a reference to the hash of the previous (parent) block in the chain.

Timestamp: It is a system that verifies the data into the block and assigns a time or date of creation for digital documents. The timestamp is a string of characters that uniquely identifies the document or event and indicates when it was created.

Nonce: A nonce number that is used only once. It is a central part of the proof of work in the block. It is compared to the live target if it is smaller or equal to the current target. People who mine, test, and eliminate many Nonce per second until they find that Valuable Nonce is valid.

Merkel Root: It is a type of data structure frame of different blocks of data. A Merkle Tree stores all the transactions in a block by producing a digital fingerprint of the entire transaction. It allows the users to verify whether a transaction can be included in a block or not.

References:

https://www.geeksforgeeks.org/

Article contributed by Kaustubh Raykar guided by Varsha Iyer