Here’s something that you have to acknowledge and preach to others: any cryptocurrency you can think of will never thrive and get popular, if it’s not hosted by a blockchain community. In this post, let’s have some more in-depth discussion about this brilliant piece of innovation that is believed by many to be the most important one in the history of computerization.
Let’s talk about blockchain components, and how they work together.
A block has 3 major components: the data, the current hash, and the previous hash. The type of data that a block possesses depends on the type of blockchain, and the reason why it’s created. In a cryptocurrency, for instance, a block contains certain information like the name of the sender, the receiver, and the amount of money being transferred.
When we speak of sender name, by the way, it doesn’t really mean an “actual real name of a person” since, in the crypto-business, you could go completely anonymous. The more appropriate term would be “sender information.” More accurately, it would be the sender’s IP address. Likewise, when we speak of the receiver, it also means the IP address of another person as well.
A block can be identified by means of its hash. It can be thought of as the digital fingerprint of a crypto-coin transaction. It identifies a block and its contents and will always be unique from any other block in existence, much like a person being identified by the uniqueness of his or her fingerprint patterns.
In Bitcoin where the SHA256 algorithm is used, a hash looks exactly like a strand of 32 alphanumeric characters in either uppercase or lowercase. When someone changes the contents of a block, the hash changes as well, which could lead to a sudden disturbance in all the other blocks too. This makes it easy for onlookers to detect if an anomaly is happening within the flow of the blockchain.
The hash of the previous block is what connects a certain block to another block. If a blockchain has just started, it will generate a “genesis block” which will be assigned with a hash that will be used by the others that will be created after it. If the contents of a certain block are changed, the hash of that block will also change, which will in a way, detach it from the rest of the blocks that follow.
Although it doesn’t happen in a physical sense like seeing a chainlink getting unraveled, the system will deem the changing block invalid because it doesn’t have the same indicator anymore of a legit block within the entirety of the blockchain. Such a concept is what makes blockchains so secure.
Thanks to the very fast processing speeds that the latest computers can offer these days, the process of calculating and verifying blocks can be done in a matter of seconds. Some cryptocurrency institutions even devote entire facilities of mainframes and supercomputers just to make sure that their clients are offered the best and fastest services they can ever expect.
In addition to that, they also assign IT personnel that are tasked to monitor and enhance the flow of their services in cases when digital machines fall short. To ensure that any modification is valid, cryptocurrencies have a mechanism called “proof of work.”
Although it slows down the block-creation process, it is a necessary procedure because it makes sure that any block that exists is an important contributory link to the entire chain. In the case of Bitcoin, it usually takes 10 minutes of calculation time to create a block and add it to the chain.
Depending on the type of any given cryptocurrency, such transaction speed could vary: it could be lesser, it could be higher.
What makes it very hard to tamper with the information inside it is that if you change just one block, you’d have to recalculate the other hashes of all the other blocks to make your modification valid. No matter how skillful a hacker is who would try to attack a blockchain, he would not have the processing power to make it happen.
We can say then that the security of a blockchain lies in the creative use of hashing and the proof of work scheme. Aside from the 2, another idea that makes blockchain even stronger is the fact that it is distributed. This is where decentralization comes into play.
Instead of having a central node where all data is stored, blockchains utilize the power of peer-to-peer networking where any computer connected to the internet can act as a storage device. When a computer joins the blockchain network, the user can get a copy of the full blockchain.
That user can then use it to verify if the block flow is still in order. The cool thing about such an activity is that you don’t have to possess some very advanced technical know-how. Anyone with the most basic computer knowledge can volunteer for this activity.
If someone creates a new block, a copy of that block will be sent to every node on the network. Every node will then verify if the block is legit and hasn’t been tampered with. And if the process checks out, the block will be successfully added to the blockchain.
All of the nodes will act as a jury to a block inclusion – they will have the right to either agree or disagree if the block must be added to the chain or not. Blocks that have fishy appearances or those that have invalid proof of work will be rejected instantly.
So to successfully change something to the blockchain, you’d have to modify the other existing blocks for each of the copies that those nodes hold. And since such a feat would be next to impossible, no hacker would be ever foolish enough to orchestrate such an attack, unless there are more than 50% of them working within the network, at least that’s the closest approximation according to experts.
