It would be awesome if you could create sovereign identity for yourself, empowering and controlling your identity without relying on any government or organization. Imagine being able to store and collect meaningful data for every head of lettuce grown on a farm, creating an unbroken chain from the ground to the market.
Even better, what if all of this information could be trusted and the system itself prevented bad actors altering it after it was collected? Blockchain can help us achieve this.
Blockchain: The Modern Ledger
W. Scott Stornetta and Stuart Haber were the first to create a cryptographically secure chain of blocks in 1991. Satoshi Nakamoto was the creator of Bitcoin, and the first person to use blockchain to solve double-spending without a central trusted authority. It was the community that made the term blockchain popular. As interest in Bitcoin grew, so did blockchain. This popularity was what exposed blockchain technology to the rest of the world.
A blockchain is composed of blocks, which is a collection transaction that is cryptographically linked to one another growing chronologically over time to create a chain of blocks. They all create a ledger.
How are blocks made and then subsequently chained together?
The mechanism that groups transactions together depends on how the blockchain was programmed. The block’s anatomy and the linkage or chaining methods can vary. A block is typically composed of transaction records. These records are used to identify the block that preceded it and also provide a timestamp. The specifications of the blockchain software determine the formation of blocks and how they are chained.
What makes Blockchain different from Cryptocurrency and Cryptocurrency?
Blockchain and cryptocurrency are two different things. Blockchains are used for cryptocurrency tracking. Cryptocurrency can be described as a digital asset. Bitcoin is a digital currency. It is possible to spend your assets twice, but it is not possible to track transactions. It is the blockchain that tracks every Bitcoin transaction and who has it. Blockchain is a revolutionary new way to maintain a ledger. People around the world are excited about its potential. Understanding the significance of ledgers is key to understanding the importance of blockchain.
“Ledgers are a record of the facts that underpin the modern economy.”
Without ledgers, London’s first bank would not have been possible. Could the ripples created by the complex ledger system developed by Knights Templar during the first crusade in the 11th Century be happening now in the 21st?
Software handles the entire exchange of digital assets such as Bitcoin without the need to use intermediaries like banks. Now imagine if that cryptocurrency asset could be swapped with something outside of the computer like a shipping container. This might improve efficiency and reduce intermediation. However, shipping containers are not able to move from one port to another and physical ownership cannot be changed with software.
Blockchain Operations
Hyperledger Fabric, IBM’s blockchain framework, uses Kafka to order transactions from multiple sources. When a “BatchSize” or “BatchTimeout”, is reached, blocks or batches of these ordered transaction records will be cut.
Bitcoin miners process transactions. They can submit a block to other peers on the network only if they have the correct solution to a complex mathematical puzzle. This process rewards the miner by giving them new bitcoins.
As the chain grows, older blocks are buried deeper and deeper within the blockchain. Because older blocks are condensed into a stored reference, it becomes increasingly difficult to modify or remove them. The latest blocks contain data that ties it directly to blocks before it. This preserves immutability and preserves the stored heritage.
Before we get to consensus, which is the way blocks are determined valid or invalid, let’s briefly discuss decentralization in Blockchains. Each participant receives a copy the ledger when decentralization is achieved in a peer to peer network. Blockchain would not be anything more than a database without decentralization of its ledger. Vitalik Buterin is the best person to explain blockchain decentralization.
“Blockchains can be viewed as politically decentralized (no one controls them), and architecturally decentralized. There is no infrastructural center point of failure, but they can also be logically centralized (there’s one common state and the system behaves like one computer).
Blockchains can be public (anyone is allowed to participate), private or consortium-based.