What is a Blockchain and How it Works?

Updated: Dec 15, 2021


What is Blockchain and How it works?- Blockchain world one of the best blogs on blockchain niche
What is Blockchain and How it works?

Blockchain's simplest explanation for a five year old

Blockchain is a secure ledger (example: account book) that can store data or assets securely. As the name suggests blockchain, consists of blocks connected to each other. Here the blocks have data that needs to be stored by the user. The blocks are linked to each other in the network and are decentralized in nature. Which means no central authority has control over a particular data. As of 2021, The internet is mainly controlled by giant companies and they have centralized authority over an application. If someone wants, they can tamper the data in a centralized system but in a decentralized network like blockchain, tampering with data is very difficult. This is one of the main reasons why blockchain is considered to be very secure.


Centralized vs Decentralized Network

Centralized vs decentralized network. Blockchain World one of the best blogs on blockchain niche
Centralized vs Decentralized network

Most of the modern systems today make use of a centralized system to develop trust. For example, in a database system, all the transactions are managed by a centralized authority. The administrator/authority do a good job in managing the transactions and developing trust, but as the power lies in the hands of a centralized entity, a malicious actor can cause a change in the integrity of the system. Blockchain is a decentralized technology. In a decentralized network, The transactions are managed by all the members of the network rather than a singular body. This forms the basis of blockchain which makes it secure in the first place.


Hash Function in Blockchain

Hashing in Blockchain. Hash Functions. Blockchain World one of the best blogs on blockchain niche
Hashing in Blockchain. Hash Functions

The hash function is a cryptographic function that converts an input string into a unique fixed-length output code known as hash code. This code generated is used to uniquely identify a block in a blockchain network. hashing forms one of the reasons why blockchain is very secure.


Properties of Hash Functions

  1. Constant Output Length: The Hash Code generated should have a constant length for any input string. For example: If one input string is "shoulder" and the other input string is "s", then the output will be "uihf7y34" and "h78j4t9j". Please note that the output string length is same for different input string length.

  2. One Way Function (Pre image resistance): One way function property of hash function states that once an output is created, it is not possible to derive the input. Please note: hashing is not same as encryption as encrypted data can be decrypted to derive the input, but in hashing the same is not possible.

  3. Quick and Easy Computation: The computation of hash code by the use of hashing function is quick. The reason is because it doesn't preserve all the data while generating the output.

  4. Collision-Free: In other words, no two input hashes should map to the same output hash.

  5. Random: The output generated will be completely random. Let's take an example, the two input strings be "sandy" and "sandy1". Although they both differ only by a single string, their hash code comes out to be "hf327hf79mh" and "uih95erzk97" which is completely different from each other.

How do blockchains work?


Linking Blocks using Hashing in Blockchain. Blockchain World one of the best blogs on blockchain niche
Linking Blocks using Hashing in Blockchain

Data in the blockchain is stored in the blocks. Whenever each data is stored, a particular hash code is generated for the same data. This means that the generated hash code is for the specific data. Slight changes made to the data can change the hash code of the block, resulting in generation of a new hash code.

Blockchain is made from blocks by linking them like a chain by storing the hash code of previous block. If we know the end block, we can trace back to the starting block by checking the hash code of the previous block.


How blockchain is secure. What happens when a hacker tries to hack a block. Blockchain world one the best blogs on blockchain niche
How Blockchain is secure.

If someone tries to tamper the data stored in one of the blocks, the hash code of the block will change and the link will break indicating the tampering of data in the blockchain. This is the reason why blockchain is considered to be very secure as slight changes in the data can be detected easily.

Types of Blockchain

  1. Public

  2. Private

  3. Hybrid

  4. Consortium

Features of Blockchain

  1. Secure

  2. Immutable

  3. Decentralized

  4. Transparent

Consensus Algorithms

  1. Proof of Work

  2. Proof of Stake

  3. Proof of Burn

  4. Proof of Elapsed Time

  5. Proof of Capacity

Advantages of Blockchain Over Database

  1. Blockchain is secure

  2. Blockchain is tamper proof

  3. Blockchain is immutable

  4. blockchain is Independent

  5. Eliminates Middlemen

Disadvantages of Blockchain

  1. Energy Consumption is more

  2. Time taken for validation decreases the speed of the transaction

  3. Computation Power required is more

Cryptocurrencies based on Blockchain

  1. Bitcoin

  2. Ethereum

Uses of Blockchain

  1. Land Ownership Tracking using Blockchain

  2. Healthcare Systems

  3. Intellectual Rights

  4. Transactions

Frequently Asked Questions on Blockchain


Q1. Why Blockchain is Secured?

Blockchain is secure mainly because of two reasons. The first is the decentralized nature of blockchain. Blockchain transactions are secure since there is no central authority. Another reason for the security is hashing. Each block is linked to the next by a hash code. Changes in one block's data will break the blockchain's link. So if a hacker wants to change the data, he must change all the hash codes of all the blocks, which is virtually impossible since the time to change is in millions of years.


Q2. What are the differences between database and blockchain?

The key differences between database and blockchain are:

  1. The database can have CRUD (Create, Read, Update and Delete) operations but blockchain only has Create and Read operations.

  2. Blockchain is more secure than database as data is immutable.

  3. Blockchain is slower than database in terms of time to complete a transaction.

  4. Blockchain is more transparent. In database only few users (admin) get access to the whole database.

  5. Blockchain is more costly as the computation power required to calculate the transaction is more. Hence Blockchain is less environment friendly than a database.

Q3. What are the common use cases of Blockchain?

The blockchain finds its application in fields such as finance, land records management by government, NFT, cryptocurrencies, supply chain management, duplicate asset prevention, etc.


Q4. Where to learn Blockchain?

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