The Blockchain Fundamentals – this post is to discuss the fundamentals of Blockchain.
Block is defined as an aggregated series of verified transactions that have taken place during a set time period, usually 10 minutes.
Blockchain is defined as a large data file that contains the definitive record of every bitcoin transaction. Anyone can look at the blockchain. It is not considered anonymous but synonymous.
The Blockchain system fundamentals break down like this:
Initiating Transaction:
Andy pays Marie for a new hoodie.
He uses the private key to his Bitcoin to initiate the transaction, which, in this case, means a change in the ownership of the currency.
Nothing else changes hands.
Miners
The Bitcoin network, known as miners, gets word of this transaction using their very powerful computers.
They run these machines full blast using a trial and error approach that fills in the blanks on the data from recent transactions.
This creates a big puzzle that has only one solution.
Block
The first miner to fill in all the appropriate transaction numbers correctly wins the right to bundle all of the recent deals into a patch of data known as a “block.”
But that’s still not the end.
Blockchain or Public ledger
After other miners verify that ALL of the data in the block is 100% error-free and that all the transactions in the block meet all the requirements to be deemed valid, the block is added to the larger blockchain of ALL previous transactions.
This is the so-called “public ledger.”
The miner who put the block together gets a bitcoin (or part of one) for the effort.
Features of Blockchain system & Bitcoin
Bitcoin has no central computer: It farms out all the data jockeying to a bunch of the computers connected to the Internet.
This is called distributed computing and it is why cryptocurrencies are referred to as “decentralized.”
There’s no “central” mainframe in some data farm keeping everything going, like with credit-card approval networks.
Blocks are limited to one megabyte of data.
All of the blocks are linked, all must be correct all the time. That is what technology demands. When they are, the system is secure and the transactions sail through at a certain maximum rate, with a certain maximum reward for the miners.
Anupam M is blogging on this site on different aspects of technology, job, and business. He is an experienced IT professional with an Engineering degree from a premier NIT. Know more
