UNDERSTANDING BLOCKCHAIN

Blockchain technology is incredibly popular nowadays. You have possibly come across that word at one point or other, so this brings me to the question, what is Blockchain Technology?

In simple terms, just like the name implies, it’s a chain of interconnected blocks that contains information. It can also be defined as a distributive system that stores information, and is completely open to anyone. This technology is trustworthy and transparent.

Blockchain Technology was first described by a group of researchers in 1991 and it was originally intended to time stamp digital documents so that it's impossible to backdate or tamper with them. It's almost like a notary; however, it went mostly unused until it was adopted by Satoshi Nakamoto to create a digital Cryptocurrency 'Bitcoin' in 2009. This has led to the assumption and belief that Blockchain is Bitcoin and that Blockchain can only be used in the financial sector but this is not the case. This is just like saying ' 'Orthopedic is the only branch of medicine and medicine is simply orthopedic'. we all know this is not the case because medicine comprises different branches like Oncology, Dentistry, Paediatric e.t.c.

This technology can be used for other things like storing medical records, creating a digital notary or even collecting taxes.

Once a data has been recorded inside a Blockchain, it becomes very difficult to change it.

HOW DOES THIS TECHNOLOGY WORKS?

We defined Blockchain as a chain of interconnected blocks. There are three things inside a block: Data, Hash of the block and Hash of previous block.

1. DATA

This is the information we store in the block. The data inside a block depends on the type of blockchain. For instance the Bitcoin blockchain stores the details of the transaction as

Sender:

Receiver :

Amount of coins :

The data of a Bitcoin Blockchain is different from the data of other Blockchains.

2. HASH OF THE BLOCK

Every block has a hash. A hash can be likened to a fingerprint. It's always unique and it identifies a block and all its contents. Once you create a block, the hash is calculated; changing something inside the block will cause the hash to change. In other words, hash are always useful when you want to detect a change in a block.

3. HASH OF THE PREVIOUS BLOCK

This effectively creates a chain of blocks, and it is this technique that makes a blockchain so secured. it connects the current block with the remaining Blockchain.

E.g

Each block has a hash and a hash of previous block. Block 3 points to block 2 and block 2 points to block one but the first block cannot point to the previous block because it’s the first one. We call block one the 'Genesis Block’.

Now let's assume you tamper with block 2 (by changing the data) this causes the hash of the block to automatically change and in turn this will make all the following blocks invalid because they no longer store a valid hash of the previous block. Changing a single block makes all the following blocks invalid.

Imagine if we can use this technology in Politics. Take a presidential election for instance where a sitting president seeking reelection is accused of manipulating the results. The opposing party will seek redress in an election tribunal and appeal up to the Supreme Court asking for a recount of votes, reelection in a particular state or Local government. Where his request is granted and the votes are recounted, he is expected to trust the system he accused of malpractice to recount in a free and fair manner and he has to accept the outcome and result from the same system. How do you trust that they won’t tamper with the result again ?

This is an example of a case where Blockchain technology could be the perfect solution.

Having highlighted the contents of a block and the importance of HASHES (being what makes this technology trustworthy)

it is important to note that using hashes is not enough to prevent tampering. Computers these days are very fast and can calculate hundreds of thousands of hashes per second. A person can effectively tamper with a block and recalculate all the hashes of the other blocks to make their Blockchain valid. In order to mitigate this, Blockchain has something called Proof-of-work: it's a mechanism that slows down the creation of new blocks.

In Bitcoin's case, it takes about 10 minutes to calculate the required proof of work and add a new block to the chain; this mechanism makes it harder to tamper with blocks because if you tamper with one block you will need to recalculate the proof of work for all the following blocks.

The security of Blockchain comes from its creative use of Hash and proof-Of-Work Mechanism, but there is also one other way that Blockchain secures themselves, and that is by being distributed. instead of having a central authority, like traditional banks, Blockchain uses a Peer to Peer Network (P2P) everyone is allowed to join this Network. When someone joins this network, he gets a full copy of the Blockchain. Whoever joins gets their information about every other block.

E.g There are three friends: Ayo, Tope, and Kenny. Ayo has #100, Tope has #60 and Kenny has #40. Ayo and Tope are already in the Blockchain and they both know what they own. Ayo knows Tope has #60 and Tope knows Ayo hasi #100. If kenny decides to join the block, she must provide proof that she owns #40 and on the basis of that proof, Tope and Ayo can decide if they want to add her to the chain or not; if they decide to add Kenny to the Blockchain she will get a copy of information about Ayo and Tope as well. All 3 now know about each other and how much they own respectively.

Let's say Kenny decides to cheat the system; she wants to send #200 to Tope, this transaction cannot hold because Tope and Ayo knows that Kenny only has #20 so she cannot do any transaction that is above #20.

When a person creates a new block, the block is sent to everyone on the network. Each node (peer/participant) then verifies the block to make sure it hasn’t been tampered with, and if everything checks out, each node adds this block to their own Blockchain. All the nodes in this network creates a CONSENSUS. They agree about what blocks are valid and which aren’t. Blocks that have been tampered with will be rejected by other nodes in the network, so to successfully tamper with a Blockchain you will need to tamper with all the blocks in the chain, redo the proof of work for each block and take control of more than 50 percent of the Peer to Peer Network (P2P) only then will your tampered block become accepted by everyone else. This is almost impossible to do.

WHY DO WE NEED BLOCKCHAIN

Why pay a huge amount of extra fees to a 3rd party (middleman) on a transaction between two already agreed parties if we can do the transaction more efficiently and in a secured manner just by depending on technology.

Also, transaction that takes days and weeks to process, we can do them in real time by using technology and without paying that huge amount of extra fees. This technology saves time, money, reduces risks, increases trust and we don’t need any central authority.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ayodele Oba

I love words and the power it wields on the human mind and emotion #Storyteller #poet