Blockchain 101

Blockchain has been kind of a buzz word lately the media and different type of companies used the word for pretty much anything. Those misuse of the word can let the public to wonder what exactly is blockchain technology.

Published in

Coinmonks

7 min readDec 4, 2020

This is why I made this article, to allow everyone interested in blockchain to understand the concept behind it.

Blockchain can be compared to a ledger to be more precise it is an electronic ledger build on top of a peer-to-peer network.
Instead of calling it a ledger, in the case of the blockchain, we called it Block. Those blocks hold data and are cryptographically linked to each other.

One important thing to know is that the blockchain is not one thing. It is more like a multitude of various technology put together to create a specific architecture. In the same way that webs apps are not one thing but a multitude of technology put together to create one coherent and functional application.

To help you better understand how those different parts and technology work together we will dive deeper into them.

How blockchain was created.

Blockchain was created by a person or group of persons under the name of Satoshi Nakamoto. The concept of blockchain was created to support the implementation of Bitcoin one of the first successful cryptocurrencies. Even though it was created to support the creation of cryptocurrencies blockchain is now used in a multitude of ways.

Photo by André François McKenzie on Unsplash

Peer-to-peer network, distribution, and decentralization.

As stated above blockchain is built on top of a peer-to-peer network this allows it to be decentralized and distributed. Some of those concepts can be difficult to understand so let explain them a little bit more.

peer-to-peer network.

A peer-to-peer network is a network with nodes that are interconnected a little bit like the internet. The only difference is that they share information directly between them without the need for a central server.

Node, wallet, and signature.
A node is one entity (i.e a person or computer) that is in the blockchain network each node as a copy of the blockchain and the data inside it. To be able to do transactions and interact on the blockchain a node need usually 2 things a wallet and a digital signature.
A wallet is an alphanumeric string(i.e a string of letters and numbers) that represents your address. In other word you adress represent you identies in the network(i.e who you are). If we use public and private key cryptography terminology, your address will be your public key. In some cases, a wallet can also consist of a private key but unlike the public key, this key needs to stay private and will be used to create your digital signature.
A digital signature is produced when someone decided to do a transaction. To sign a transaction a mathematical function is done on the data using your public key (i.e address) and your private key the result of this action is a number that we called a digital signature.

Centralisation vs Decentralisation.

To better understand centralization and decentralization you think about how Facebook and other popular web applications work.

Those systems are good examples of centralized systems because they are all controlled by a centralized entity.This means that for any data transfer to be done you need to go through a third party. this also means that you have to trust the third party.

Take for example Facebook their data can be scattered under different servers all around the world but all the data is under the control of a single entity which is Facebook.

A decentralized system tries to disrupt this centralized architecture by not relying on a third party.

Difference between centralised, decentralised and distributed.

Block.

a block is the basic unit of a blockchain the same way a node is the basic unit of a linked list a block as usually two distinct parts the header and the body lets explain the header first.

Data in the header.

The header is used to store those pieces of information the index of the block, the nonce of the block, the hash of the block, and the hash of the previous block.

Index: Index hold the number of the specifique block (i.e his place in the blockchain)
Timestamp: The timesamp tell when the block was created.
Hash and previous hash. A hash is a digital signature of a block is made with the help of a hash function. A hash function is a mathematical function that takes any amount of data into an alphanumeric string with a fixed length. Any change even the smallest one into the input will result in a totally different hash. This makes it almost impossible to find the input of a hash function giving its output. As stated before each block of the blockchain hold the hash of the block before him.
Nonce: In a previous paragraph, we explain that it is impossible to guess the input of a hash function. Well this is partially true one way you can get find the input of a hash function is by computing all the possible input this is called a brute force attack. To solve this problem we can put a random number as an input or hash that will make this type a brute force attack difficult to do. The nonce is also used in the proof-of-work consensus protocol that we will explain later in the article.

Data in the body.

The body is used to store the data that you whant to put in the blockchain. We often called the data hold by a block a transaction but those terms can be interchangeable.

Blockchain protocol.

a protocol is a set of rule programmed into the blockchain that dictates how it should work the implementation of a certain king a blockchain dictate how it works.

the protocol ensures that the network runs the way it was intended to by the creator even though it is autonomous and is not controlled by anyone.

proof-of-work is one of the protocols used in Blockchain this is one special kind of protocol named a consensus protocol.

A consensus protocol allows a decentralized system to achieve an agreement in the blockchain case this agreement consists of choosing which block will be added to the blockchain.

As a matter of fact, you can only add a new block in the blockchain after a consensus between the participants in the network and once this is done the block can never be erased or change.

Mining and proof-of-work.

In proof-of-works nodes in the computer compete against each other to hash the block until they achieved a certain result that is chosen by the protocol for example the giving hash should begin with a certain number of zeros. To do so they tweak a parameter that is in the block to get the right hash usually the parameter tweak is the nonce that we explain in a previous part of this article.

The nodes that produce blocks by solving the proof-of-work are named miners and they receive a reward after completing the proof-of-work.

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How can we use blockchain and companies using Blockchain technology.

Blockchain can be used in a multitude of different ways one of the more used cases is the creation of a cryptocurrency, it can also be used in the supply chain. For example, Walmart is using blockchain to better trace and managed their product business, and the use case for this technology are limitless here are 3 companies that are putting blockchain to use.