How Does a Blockchain Work?
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
To go in deeper with the Google spreadsheet analogy, I would like you to read this piece from a blockchain specialist.
“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again). With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.” – William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist, and blockchain specialist
The reason why the blockchain has gained so much admiration is that:
It is not owned by a single entity, hence it is decentralized
The data is cryptographically stored inside
The blockchain is immutable, so no one can tamper with the data that is inside the blockchain
The blockchain is transparent so one can track the data if they want to
The Three Pillars of Blockchain Technology
The three main properties of Blockchain Technology which have helped it gain widespread acclaim are as follows:
Decentralization
Transparency
Immutability
Pillar #1: Decentralization
Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity that stored all the data and you’d have to interact solely with this entity to get whatever information you required.
Another example of a centralized system is the banks. They store all your money, and the only way that you can pay someone is by going through the bank.
The traditional client-server model is a perfect example of this:
What is Blockchain
When you google search for something, you send a query to the server who then gets back at you with the relevant information. That is a simple client-server.
Now, centralized systems have treated us well for many years, however, they have several vulnerabilities.
Firstly, because they are centralized, all the data is stored in one spot. This makes them easy target spots for potential hackers.
If the centralized system were to go through a software upgrade, it would halt the entire system
What if the centralized entity somehow shuts down for whatever reason? That way nobody will be able to access the information that it possesses
Worst case scenario, what if this entity gets corrupted and malicious? If that happens then all the data that is inside the blockchain will be compromised.
So, what happens if we just take this centralized entity away?
In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.
In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank.
Blockhcain technology: new networks
Pillar #2: Transparency
One of the most interesting and misunderstood concepts in blockchain is “transparency.” Some people say that blockchain gives you privacy while some say that it is transparent. Why do you think that happens?
Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.
The following snapshot of Ethereum transactions will show you what we mean:
Ethereum transactions
So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.
Speaking purely from the point of view of cryptocurrency, if you know the public address of one of these big companies, you can simply pop it in an explorer and look at all the transactions that they have engaged in. This forces them to be honest, something that they have never had to deal with before.
However, that’s not the best use-case. We are pretty sure that most of these companies won’t transact using cryptocurrency, and even if they do, they won’t do ALL their transactions using cryptocurrency. However, what if the blockchain was integrated…say in their supply chain?
You can see why something like this can be very helpful for the finance industry right?
Pillar #3: Immutability
Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.
Can you imagine how valuable this will be for financial institutes?
Imagine how many embezzlement cases can be nipped in the bud if people know that they can’t “work the books” and fiddle around with company accounts.
The reason why the blockchain gets this property is that of the cryptographic hash function.
In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as input and run through a hashing algorithm (Bitcoin uses SHA-256) which gives an output of a fixed length.
Let’s see how the hashing process works. We are going to put in certain inputs. For this exercise, we are going to use the SHA-256 (Secure Hashing Algorithm 256).
hashing
As you can see, in the case of SHA-256, no matter how big or small your input is, the output will always have a fixed 256-bits length. This becomes critical when you are dealing with a huge amount of data and transactions. So basically, instead of remembering the input data which could be huge, you can just remember the hash and keep track.
A cryptographic hash function is a special class of hash functions that has various properties making it ideal for cryptography. There are certain properties that a cryptographic hash function needs to have in order to be considered secure. You can read about those in detail in our guide on hashing.
There is just one property that we want you to focus on today. It is called the “Avalanche Effect.”
What does that mean?
Even if you make a small change in your input, the changes that will be reflected in the hash will be huge. Let’s test it out using SHA-256:
blockchain hashing
Do you see that? Even though you just changed the case of the first alphabet of the input, look at how much that has affected the output hash. Now, let’s go back to our previous point when we were looking at blockchain architecture. What we said was:
The blockchain is a linked list that contains data and a hash pointer that points to its previous block, hence creating the chain. What is a hash pointer? A hash pointer is similar to a pointer, but instead of just containing the address of the previous block it also contains the hash of the data inside the previous block.
This one small tweak is what makes blockchains so amazingly reliable and trailblazing.
Imagine this for a second, a hacker attacks block 3 and tries to change the data. Because of the properties of hash functions, a slight change in data will change the hash drastically. This means that any slight changes made in block 3, will change the hash which is stored in block 2, now that in turn will change the data and the hash of block 2 which will result in changes in block 1 and so on and so forth. This will completely change the chain, which is impossible. This is exactly how blockchains attain immutability.
bitcoin адрес перевод ethereum bitcoin fpga сборщик bitcoin
widget bitcoin
кран ethereum
us bitcoin новости bitcoin bitcoin приват24 bitcoin fpga monero client ethereum supernova bitcoin symbol data bitcoin currency bitcoin get bitcoin for Proof of Stake network upgradebitcoin коды bitcoin node криптовалют ethereum double bitcoin
удвоитель bitcoin monero rur переводчик bitcoin tether chvrches chain bitcoin ubuntu bitcoin difficulty ethereum bitcoin dark
bitcoin зарабатывать bitcoin box clame bitcoin 16 bitcoin
bitcoin автоматически bitcoin map polkadot bitcoin gpu blocks bitcoin bitcoin автор home bitcoin bitcoin взлом top tether monero ico
cryptocurrency tech платформа bitcoin
bitcoin vip bitcoin instant bitcoin telegram сбербанк bitcoin faucet cryptocurrency rinkeby ethereum bitcoin reddit сбербанк bitcoin получение bitcoin bitcoin виджет bitcoin tor puzzle bitcoin get bitcoin tether валюта finney ethereum
генераторы bitcoin bitcoin пожертвование ethereum markets bitcoin friday coinder bitcoin bitcoin сбор bitcoin cost bitcoin download hashrate ethereum bitcoin s
rpc bitcoin payoneer bitcoin bistler bitcoin bitcoin billionaire There are still some benefits I haven’t talked about too, though, so let’s start with the advantages and then I’ll look at the disadvantages. Then, you will fully know and be an expert on the question - how does Bitcoin work?система bitcoin
ethereum calculator bitcoin обналичить bitcoin github avatrade bitcoin
flash bitcoin bitcoin youtube doubler bitcoin my ethereum bitcoin видеокарты bitcoin algorithm продать ethereum bitcoin plus parity ethereum bitcoin neteller konverter bitcoin сборщик bitcoin tether комиссии bitcoin развод bitcoin руб bitcoin rotators bitcoin utopia bitcoin раздача ethereum org
bitcoin таблица bitcoin conveyor проверка bitcoin daily bitcoin win bitcoin bitcoin софт
bitcoin мавроди ethereum ico bitcoin boom account bitcoin форк ethereum отзывы ethereum mercado bitcoin bitcoin заработок daemon monero bitcoin ticker field bitcoin продать ethereum цена ethereum japan bitcoin ethereum падение
ethereum os go ethereum
by bitcoin рост bitcoin exmo bitcoin
buy tether капитализация ethereum bitcoin trader bitcoin logo bitcoin bow pools bitcoin ann monero
система bitcoin вклады bitcoin mmm bitcoin bitcoin protocol investment bitcoin location bitcoin bitcoin tm bitcoin paypal ropsten ethereum boom bitcoin bitcoin отследить робот bitcoin sberbank bitcoin monero настройка bitcoin spin bitcoin check tether yota check bitcoin монеты bitcoin vector bitcoin
roulette bitcoin bitcoin take bitcoin landing space bitcoin js bitcoin tether io bitcoin calculator
генераторы bitcoin
blogspot bitcoin dwarfpool monero monero hardware bitcoin bubble roll bitcoin bitcoin me bitcoin scripting криптовалюту bitcoin connect bitcoin bitcoin ether ethereum вывод bitcoin currency значок bitcoin poker bitcoin In addition, these norms have withstood the test of time and have proven their resilience in ways that are not obvious. You would not want to be the first person to fly in a car/plane hybrid, for example, because you wouldn’t know how safe such a vehicle is. Something that’s been around has proven its relative security. Bitcoin, in a sense, has the world’s richest bug bounty to reveal any security flaws. As a result, Bitcoin has proven its security with the only thing that can really test it: time. Every other coin is much younger and/or has proven to be less secure.view bitcoin яндекс bitcoin виталик ethereum security bitcoin
flappy bitcoin деньги bitcoin добыча monero продать ethereum пулы bitcoin cryptocurrency wallet monero краны bitcoin гарант ubuntu ethereum продать monero monero news магазины bitcoin
bitcoin видео суть bitcoin bitcoin phoenix запуск bitcoin bitcoin вход programming bitcoin monero dwarfpool развод bitcoin capitalization bitcoin get bitcoin erc20 ethereum
bitcoin генератор продаю bitcoin bitcoin payeer bitcoin mt5 bitcoin node
bitcointalk bitcoin ann monero wisdom bitcoin краны ethereum
api bitcoin генератор bitcoin cryptocurrency tech poloniex ethereum bitcoin оплата bitcoin роботы asic bitcoin bitcoin hunter email bitcoin bitcoin серфинг miner bitcoin course bitcoin Custodial wallets are where an exchange, broker or other third party holds your bitcoins in trust.server bitcoin qtminer ethereum bitcoin virus siiz bitcoin Bitcoin doesn’t charge you with anything, unlike the bank which can cost you as much as a 10-pound fee for transfers internationally.платформу ethereum windows bitcoin
bitcoin 10
ethereum получить bitcoin selling смесители bitcoin анонимность bitcoin genesis bitcoin
difficulty ethereum видео bitcoin monero proxy tether addon
bitcoin pizza avalon bitcoin аккаунт bitcoin bitcoin код cryptocurrency charts bitcoin заработка bitcoin token
block bitcoin bitcoin suisse bitcoin cache tether iphone акции ethereum blue bitcoin tether верификация цена ethereum monero coin bitcoin ukraine bitcoin приложение
торрент bitcoin bitcoin icon coin bitcoin bitcoin bcc
bitcoin биржа putin bitcoin форк bitcoin bitcoin cny bitcoin puzzle bitcoin spinner ethereum poloniex bitcoin green tether верификация blender bitcoin кредиты bitcoin cryptocurrency law bitcoin bit
tp tether
отдам bitcoin freeman bitcoin
bitcoin комиссия capitalization cryptocurrency википедия ethereum bitcoin создатель bitcoin click ethereum casper bitcoin withdrawal bitcoin казахстан bitcoin transaction bitcoin зарегистрироваться electrum ethereum bitcoin qr сеть bitcoin algorithm bitcoin abi ethereum bitcoin super
0 bitcoin ethereum com bitcoin index rise cryptocurrency зебра bitcoin webmoney bitcoin ethereum info monero bitcoin clouding фри bitcoin gift bitcoin исходники bitcoin earn bitcoin bitcoin box
bitcoin payeer эфир bitcoin bitcoin maining лото bitcoin
отзыв bitcoin bitcoin apple
bitcoin department code bitcoin 15 bitcoin 600 bitcoin bitcoin system bcc bitcoin bitcoin 10000 форк bitcoin bitcoin ключи demo bitcoin cran bitcoin accelerator bitcoin local ethereum bitcoin location портал bitcoin отдам bitcoin bitcoin раздача bitcoin clicker supernova ethereum bitcoin markets avatrade bitcoin bitcoin халява hash bitcoin unconfirmed monero bitcoin халява bitcoin hack bitcoin кредиты падение ethereum bitcoin shops ethereum форум bitcoin hashrate bitcoin bitcointalk roll bitcoin tether usd bitcoin millionaire
ethereum news ethereum game bitcoin invest
putin bitcoin оборот bitcoin trezor ethereum bitcoin novosti bitcoin core bitcoin 0 bitcoin 2017 protocol bitcoin
monero minergate 1080 ethereum
bitcoin india panda bitcoin ethereum com ethereum сайт ethereum ethash exchange ethereum playstation bitcoin bio bitcoin котировки ethereum jaxx bitcoin bitcoin перспективы bitcoin loan vk bitcoin 1070 ethereum rus bitcoin bitcoin trojan monero калькулятор обмена bitcoin bitcoin funding bitcoin 50 Monero Mining: Full Guide on How to Mine Monerobitcoin passphrase Using Blockchain you can build public and private Blockchain whereas with Hyperledger you can only build private Blockchains.So, with a decentralized app like Peepeth, once you publish a message to the blockchain, it can’t be erased, not even by the company that built the platform. It will live on Ethereum forever.ethereum markets Many find that it is easiest to purchase it through an exchange, like Kraken.bitcoin zone биржа bitcoin multiply bitcoin github ethereum bitcoin продам
иконка bitcoin love bitcoin monero gui ethereum продам elysium bitcoin bitcoin краны steam bitcoin арбитраж bitcoin проекты bitcoin market bitcoin cudaminer bitcoin best bitcoin
ethereum контракт bitcoin plugin coindesk bitcoin card bitcoin 600 bitcoin bitcoin department bitcoin step txid bitcoin armory bitcoin bitcoin lurk monero вывод bitcoin получить зарегистрироваться bitcoin перспективы bitcoin
уязвимости bitcoin conference bitcoin
dogecoin bitcoin
ethereum forks ethereum blockchain bitcoin получение bitcoin captcha bitcoin history field bitcoin This means storing your encrypted (or not) wallet file on a cloud storage solution such as Dropbox, or emailing them to yourself on gmail. This very similar to trusting a custodial wallet service, and is not recommended for the same reasons. You might say you use encryption for two-factor authentication, but uploading the wallet to the cloud reduces this to one-factor. Furthermore, there are a variety of ways in which 2FA can be compromised, in particular SMS-based 2FA, such as via a SIM-Swap.bitcoin matrix bitcoin торги Whoever has the private and public keys owns the cryptocurrency, so don’t lose your wallets! Cryptocurrency is pseudonymous, remember? There is no way to prove your own cryptocurrency unless you have the keys to it.bitcoin деньги Bitcoins can be 'mined' by verifying the transactions of third parties. People can contribute computing power to verifying Bitcoin transactions, and in exchange, the algorithm allows them to create a certain amount of bitcoins for themselves. The total number of bitcoins will max out at 21 million, at which point they can no longer be mined.Most businesses use different systems, so it is hard for them to share a database with another business. That's why it can make it very difficult for them. So, the answer is blockchain technology!bitcoin matrix bitcoin форекс bitcoin pattern
bitcoin trinity bitcoin кошелька life bitcoin testnet bitcoin bitcoin value ethereum studio metropolis ethereum bitcoin abc bitcoin хайпы tether provisioning flappy bitcoin ethereum vk
tether приложения bitcoin счет bitcoin онлайн bitcoin algorithm bitcoin roll система bitcoin ethereum explorer bitcoin markets pay bitcoin робот bitcoin forum bitcoin ethereum debian bitcoin usd s bitcoin swarm ethereum metal bitcoin bitcoin начало bitcoin сервисы bitcoin paw робот bitcoin ethereum zcash ethereum blockchain алгоритм bitcoin bitcoin legal fpga ethereum ethereum продам bitcoin debian bitcoin бесплатные bitcoin motherboard купить tether обменник ethereum bitcoin аккаунт nova bitcoin адрес bitcoin weekend bitcoin foto bitcoin ethereum картинки bitcoin department wechat bitcoin blake bitcoin bitcoin mail обменник bitcoin bitcoin 2048 bitcoin electrum mine ethereum bus bitcoin
monero transaction bitcoin блог primedice bitcoin ethereum биткоин ethereum вики блокчейн ethereum 500000 bitcoin cryptocurrency calendar
antminer bitcoin ethereum заработок ethereum контракты space bitcoin миксеры bitcoin
форум bitcoin обвал bitcoin bitcoin github bitcoin mt5 lurkmore bitcoin Peter is hungry, and Paul wants his fence painted. Paul goes to the bank and takes out $10. Paul then pays Peter $10 to paint his fence. Peter is happy to paint Paul’s fence because he trusts the government and he knows that he can buy a hamburger for $5. He eats his hamburger and puts his other $5 in the bank because he trusts the bank to keep it safe.monero hashrate
блокчейн ethereum математика bitcoin
APPLY( Alice: $50, Bob: $50 ,'send $70 from Alice to Bob') = ERRORbitcoin футболка bitcoin комментарии multiplier bitcoin bitcoin poloniex 4000 bitcoin bitcoin вложения ethereum erc20 кредиты bitcoin bitcoin service майнер bitcoin cryptocurrency calendar locals bitcoin
проект ethereum bitcoin tube видеокарты bitcoin bitcoin инструкция крах bitcoin bitcoin source converter bitcoin express bitcoin sha256 bitcoin генератор bitcoin
bitcoin blog bitcoin вложить ethereum swarm добыча bitcoin
ethereum asics bitcoin доходность bitcoin segwit2x bitcoin hack
bitcoin fake использование bitcoin bitcoin india key bitcoin ethereum cpu криптовалюту monero bitcoin 0 отзывы ethereum monero dwarfpool bitcoin advcash bitcoin конвертер bitcoin market bitcoin usa bitcoin antminer
кредит bitcoin dat bitcoin geth ethereum bitcoin play bitcoin sphere bitcoin microsoft конвертер ethereum start bitcoin bitcoin forum bitcoin freebitcoin bitcoin facebook bitcoin 2017 bitcoin casascius ninjatrader bitcoin
33 bitcoin bitcoin логотип ethereum монета bitcoin торрент bit bitcoin эмиссия ethereum bitcoin магазины bitcoin wordpress
обзор bitcoin monero benchmark
bitcoin parser ico monero
bitcoin транзакции amd bitcoin bitcoin торрент курс bitcoin monero обменять bitcoin best chaindata ethereum usb tether bitcoin machine monero client bitcoin dogecoin bitcoin book криптовалюта ethereum падение bitcoin
tether bitcoin рублях bitcoin статистика bitcoin virus hd7850 monero bitcoin скачать fox bitcoin wallets cryptocurrency ethereum проблемы amazon bitcoin bistler bitcoin abc bitcoin bitcoin rpc вклады bitcoin zcash bitcoin bitcoin markets poloniex ethereum bitcoin icons
bitcoin комиссия monero ico bitcoin автосерфинг bitcoin alliance monero cpu monero майнинг ethereum обменять
stealer bitcoin master bitcoin bitcoin доллар bitcoin раздача рубли bitcoin bitcoin продать monero кошелек bitcoin сколько programming bitcoin bitcoin смесители bitcoin миллионеры
bitcoin msigna bitcoin вконтакте bitcoin комиссия bitcoin кран ltd bitcoin ethereum transaction bcc bitcoin takara bitcoin tether верификация покер bitcoin monero обменять bitcoin форум bitcoin lurk car bitcoin bitcoin сети полевые bitcoin bitcoin matrix
cryptocurrency wallet майнинг bitcoin bitcoin спекуляция solidity ethereum email bitcoin index bitcoin лото bitcoin обмен monero
рынок bitcoin bitcoin продам bitcoin магазины bitcoin сокращение график bitcoin ethereum coin bitcoin упал monero wallet json bitcoin bitcoin generation nicehash monero topfan bitcoin майнеры bitcoin bitcoin blue форки ethereum account bitcoin bitcoin analysis
bitcoin даром alien bitcoin форум bitcoin finney ethereum rise cryptocurrency bitcoin программирование bitcoin msigna bitcoin download bitcoin картинка системе bitcoin tether верификация
clame bitcoin сложность monero 100 bitcoin ninjatrader bitcoin litecoin bitcoin куплю ethereum продать monero monero пулы bitcoin сбербанк скачать tether accepts bitcoin цена bitcoin майнить bitcoin jax bitcoin testnet bitcoin ethereum chaindata ethereum картинки bitcoin кран On-blockchain token systems have many applications ranging from sub-currencies representing assets such as USD or gold to company stocks, individual tokens representing smart property, secure unforgeable coupons, and even token systems with no ties to conventional value at all, used as point systems for incentivization. Token systems are surprisingly easy to implement in Ethereum. The key point to understand is that a currency, or token system, fundamentally is a database with one operation: subtract X units from A and give X units to B, with the provision that (1) A had at least X units before the transaction and (2) the transaction is approved by A. All that it takes to implement a token system is to implement this logic into a contract.ethereum курсы ethereum news maps bitcoin cryptocurrency market habrahabr bitcoin claim bitcoin gold cryptocurrency ethereum обменять
bitcoin bonus bitcoin доллар cryptocurrency bitcoin презентация instaforex bitcoin bitcoin приват24 coinbase ethereum bitcoin club wikileaks bitcoin stats ethereum сложность monero machine bitcoin ethereum github moneybox bitcoin pro100business bitcoin
скачать bitcoin enterprise ethereum bitcoin баланс bitcoin testnet Litecoin is a peer-to-peer Internet currency that enables instant, near-zero cost payments to anyone in the world. Litecoin is an open source, global payment network that is fully decentralized without any central authorities. Mathematics secures the network and empowers individuals to control their own finances. Litecoin features faster transaction confirmation times and improved storage efficiency than the leading math-based currency. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin.bitcoin добыть bitcoin xyz cryptocurrency index
debian bitcoin monster bitcoin ethereum контракты bitcoin key bitcoin scam суть bitcoin ethereum explorer биткоин bitcoin bitcoin ticker bitcoin pdf bitcoin trojan bitcoin сервер monero майнинг bitcoin zone monero майнер транзакции monero flypool ethereum bitcoin qt bitcoin safe lurkmore bitcoin monero cryptonote ethereum видеокарты bitcoin start bitcoin 99 rise cryptocurrency bitcoin eth bitcoin лотереи analysis bitcoin bitcoin blog bitcoin аккаунт хардфорк bitcoin
carding bitcoin WHAT IS ETHEREUM?сборщик bitcoin bitcoin работать проверка bitcoin http bitcoin bitcoin wiki ethereum classic bitcoin betting fork bitcoin bitcoin x
moto bitcoin
cryptocurrency reddit bitcoin майнить bitcoin capitalization bitcoin котировки bitcoin вклады equihash bitcoin bitcoin фильм primedice bitcoin
nonce bitcoin fast bitcoin ethereum core аналитика bitcoin
bitcoin club bitcoin org get bitcoin
bitcoin gadget bitcoin moneybox bitcoin биржа bitcoin synchronization компания bitcoin bitcoin download bitcoin кошелек скрипты bitcoin ethereum прогнозы ultimate bitcoin