Blockchain Technology: The Backbone of Crypto
Crypto is here and it's not going nowhere.
This market continues to expand more every day. At the center of this digital revolution is block chain technology. Just like anything new it can be intimated. The good news is you do not have to know how everything works on an atomic level to use it. Thankfully we don't have to build our own cars or cellphone to use them. We simply charge our phones and fill up our gas tanks. Understanding what blockchain technology is on a basic level will give you better insights into the world of crypto.
The term block chain was originally described in 1991 by Stuart Haber and W Scott Stornetta. This technology was used to timestamp digital documents. This stamp prevented each document from being backdated or tampered with. Years later in 2008 a group anonymous developers named Satoshi Nakamoto, released a white paper that adopted this record keeping technology for a decentralized digital currency called Bitcoin.
How does blockchain work?
Blockchain consist of block of information that are linked together in a chain. This data is different depending on the type of block chain for instance Bitcoin blockchain contains info of the sender, receiver, and amount of coins.
Inside of every block is something called a hash. Every time a new block is created it one. This hash distinguishes this block from the rest of the chain.
Hashes have 3 special features
- Hashes are useful for determining changes to blocks because changes to the block will cause the hash to change.
- Whenever a hash change the block is no longer the same block
- Inside each block contains the Hash of the current block and its previous block
The first block is called the genesis block, its special because it's the first one and cannot point to a previous block.
What about Tampering? Computers are fast enough to calculate hundreds of hashes per second. Changing a single block will make all the preceding blocks invalid. Like a stack of falling dominos, this will cause the rest of the chain to become invalid.
You would think a person could tamper with a block and revaluate all the other blocks to their block valid again with a good computer. However, there is another two other things preventing this from happening.
- One is something called proof of work that slows down the creation of new blocks. In the case of Bitcoin it takes approximately 10 minutes to calculate the proof of work and add a new block to the chain.
- Distribution: peer to peer network, anyone can join the network. When they join they get a full copy of the blockchain. When a new block is created everyone is sent the block. Nodes agree on which blocks are valid or invalid. Each nodes verify the new block to ensure that nothing has been tamper with. All the nodes on the network must reach consensus. Blocks that are tampered are rejected by other nodes on the network.
So to tamper with a blockchain to make your block accepted by everyone else: you'll need to tamper with all blocks on the chain, redo the proof of work for each block and take control of more than 50% of the peer-to-peer network. This is impossible to do.
Blockchain technology continues to evolve with developments such as smart contracts, Defi and NFTs.