In recent years crypto currency has grasped the attention of millions looking to expand their monetary horizons. In the past few months, crypto currency has exploded. From the bullish bitcoin reach a peak of 60k per coin (Feb 19, 2021), to the meme coin DOGE gaining substantial ground to compete with 1 tweet. Blockchain is the foundation of the entire crypto currency universe.
Primarily it’s uses have come in handy monetarily. A blockchain is a decentralized ledger of all transactions across a p2p (peer to peer) network. This technology allows participants to confirm transactions without a need for a centralized clearing authority. Potential applications can include transfers of funds, trades settling, voting, and much more.
What is the process of Blockchain?
The process of Blockchain involves bundling records together into blocks and adding them to a chain one after the other.
A trade is recorded. For example, let’s say Spidey is selling two of his coins to Shocker for $1400. The record lists the details, along with a digital signature from each party.
Next, the record is then checked by the network. The computers in the network, called ‘nodes’, check the details of the trade to ensure its valid.
Any records that were accept by the network are added to a block. Every block contains a distinct code called a hash; furthermore, It contains the hash of the last block in the chain.
The block is added to the chain like a new link. The hash are then used to connect the blocks together in a uniqe order. Which adds to the security of the process.
Blockchain: The Gaurdian
Hash codes are an example of encryption, which is a way to scramble the contents of any file so that only those with a digital ‘key’ can decode it. Let’s look at two important characteristics of hash codes:
Initially, hashes are computed via a math function that takes digital information and camouflages it as a code of letters and numbers which the same length, always. For example, the most recent tweet from LeBron James was much shorter than “War and Peace” by Leo Tolstoy, but they would generate hashes of the same length.
Secondly, if there’s a change to the original input then the block will generate a new hash. So if I decided to delete just one space of Leo’s 587k word e-book, it would show because the hash will be altered. Now that the hash is actually altered, it breaks the chain and in order to fix I would have to have an incredibly powerful computer to do complete the computation.
Decentralization: The Future
Decentralization is good for the Future especially in terms terms of monetary transactions. Everything happens faster, instead of a singular node or computer being the gatekeeper the process is up for grabs between multiple nodes or computers. But, there is also a downside to decentralization which is the lack of trust from who’s on the other side of the node.
One option is to only allow people you know, like employees, join in. But blockchains like the bitcoin network for example are open to anyone. Members are anonymous; moreover there is no way to know if the person on the other side is anyone you can trust.
To fix this problem and build trust, these blockchains create tests for those computers seeking to join and add more on the chain. These tests are dubbed consensus models.
Testing, Testing; 1.. 2.. 3
These tests that have been set are in place for the members of the network to prove their loyalty and trust to the network. This is normally done in 2 ways. First being proof of work and the second being proof of stake.
Proof of work. Adding a block to the chain, every node must prove that they have done ‘work’ by solving everchanging and difficult puzzle based on computations. This is where the term “coin miner” come from. Mining uses a massive amount computational power. For their efforts, members can gain different rewards – for example ethereum or bitcoin. Two companies that are known miners RIOT and Marathon Patent Group.
Proof of stake is as it sounds. Purchase a stake in the company (buy coins) and like an arcade they let you join with those tokens and they can begin to mine. The more token they’ve accumulated means they more they’re allowed to mine.
The Possibilities with Blockchain
Blockchain will become a practical way of storing information. There are already a few operations that use block chain like crypto currency. But, Blockchain will also be able to help in areas such as banking, healthcare, supply chains, property listing and voting. All different types of information that is more easily recorded and stored without having to worry about interference from the outside.
Blockchain is the future. Decentralized finance is already breaking down walls. With the help of Microsoft and its blockchain programs, hospitals have been able to move patient data faster than ever. Crypto currency acces is at an all time high and the altcoins are gaining huge ground in the early months of 2021. We are headed into a new digital age and its only just the beginning.