Nowadays, blockchain is being a streaming topic around the globe. Some are extremely interested in knowing its concept and working, while others are completely aloof towards it. But, with time, awareness of people for blockchain is increasing and they have started to believe in this decentralized concept. It’s a surety that the ones who have become a part of blockchain network, can never state something negative about it because it fully changes your vision and thoughts by which you see the world.
What is Blockchain?
The blockchain is basically a technology, made up of the worldwide network of computers/servers used to maintain the database altogether which records cryptocurrencies’’ transactions. In simple words, we can say that cryptocurrencies are supported and managed by this network rather than getting involved with any central authority. Is clearly means that blockchain allows all the users to perform decentralized transactions. The fundamental meaning of decentralized network is that it functions on a peer-to-peer connectivity, that’s why it neglects third-party interruptions.
“A blockchain is a magic computer that anyone can upload programs to and leave the programs to self-execute, where the current and all previous states of every program are always publicly visible, and which carries a very strong crypto economically secured guarantee that programs running on the chain will continue to execute in exactly the way that the blockchain protocol specifies.” -Vitalik Buterin
How does Blockchain work?
The blockchain is said to be new internet by many tech enthusiasts using different words. The fact is completely true but Blockchain is a combination of various old concepts merged to produce something revolutionary. These concepts are:
1. Authentication Keys
These can also be called as Cryptographic keys. These keys are basically of two types which are private key and public key. The basic purpose to introduce these cryptographic keys is to authenticate both the involved users’ identity to make the transaction secure at first level. These keys are used to create a digital signature. At both ends of the transaction, sender, as well as receiver, hold these 2 keys i.e. private and public. One’s identity is differentiated by the combination of keys because every different user holds different keys. That is the reason why their digital signatures differ.
We can suppose that 2 persons X and Y are involved in a transaction, then X will hold a combination of private key and public key and similar will be available at Y’s side.
Private Key + Public Key = Digital Signature
Now that the sender’s and receiver’s identities have been defined. The next step is to perform fully protected and witnessed series of transactions.
2. P2P Network/ Distributed Servers
The concept of distributed servers can be understood by one thing that we can only approve or trust a technology if we see it fully safe as well as witness it while successfully performing its specific function. That is why Blockchain includes a series of enormous servers connected around the globe. All of these servers feed the same records of a transaction and keep on updating them time to time. It is like maintaining a public ledger but with a security key. The key here is some mathematical problem which is to be solved to perform a successful transaction. These servers can be considered as some group of validators who make sure to perform a flawless as well as protected transaction. The main thing to keep in attention is that all of these servers should be kept on and connected to internet 24X7. When the cryptographic keys emerge with these distributed servers, then only some super secured and digitally sound transactions can be accomplished. This process starts when X acquires its private key and makes an announcement to perform a transaction with Y and transfers a kind of puzzle to Y’s public key.
3. Protocol generation via blocks
As the name represents, Blockchain is a chain of blocks, with each block containing information of the users performing transactions. Each block acquires digital signature, timestamp as well as required authenticated information which is then distributed to all the other blocks involved in the network. Not that we know that various servers are involved in the phenomenon, then who is there to perform and function these servers properly. People who volunteer to help in maintaining the public ledgers as well as perform secure transactions are called Miners. These miners are rewarded with the involved cryptocurrency after each successful transaction. All the involved miners are free to increase the number of blocks in a blockchain to make the transaction as much secure as possible.
These miners clearly vote with their CPU capability, offering an agreement to introduce new blocks or rejecting invalid blocks. When almost all of the miners reach the same solution, they may add a new block to the blockchain. The new block is also timestamped and holds data or information.
For each blockchain, the type, amount, as well as verification strategies, may differ. Every miner and user have to follow blockchain’s protocol to perform a successful and safe transaction.