CODESCRACKER

Blockchain Tutorial for Beginners | Blockchain Technology

This "blockchain" course was developed and published to provide an overview of the subject. This course is intended for people who are new to blockchain or who want to learn more about it.

I attempted to cover the majority of the "basics" of blockchain in this post; however, the remaining topics are covered in separate articles. Here is a list of the topics that will be covered in this article for your convenience.

These topics will be discussed in order, so let's get started with the definition of blockchain.

What exactly is blockchain?

Blockchain is defined as a distributed database ledger that electronically stores information in digital format. It is a growing list of data stored in a grouped form called blocks that are linked by cryptography, where each new block in the chain carries a cryptographic hash of the block that existed previously, transaction data, and a time stamp.

Because every block in the chain contains data about previous blocks, the information in a blockchain can never be altered or manipulated.

Blockchains are publicly distributed ledgers that are managed through a peer-to-peer network.

The blockchain concept has the potential to bring about a new technological revolution.

Blockchain is one of the most popular topics in today's computer age. That is, it is one of the most trending topics around the globe because of the increase in the cryptocurrency market over the internet.

Blockchain Technology's History

Blockchain started with the invention of an alternative currency on the internet, known as Bitcoin. This currency is not issued by a central authority. Instead, it is circulated by an automated consensus among users who are connected through a network.

Bitcoin currency is a form of digital cash for which transactions are made through the internet only in a decentralized system using a public ledger known as the blockchain.

Blockchain technology was introduced in the year 2008 by Satoshi Nakamoto to be used as a public transaction ledger for the Bitcoin cryptocurrency.

Blockchain technology is based on the work of Dave Buyer, Stuart Haber, and W. Scott Stornetta. However, Satoshi Nakamoto's identity remains unknown to this day.

Blockchain technology was implemented within the Bitcoin network for the very first time. Initially, blockchain attracted a lot of public interest because of its ability to be anonymous. The real appeal of this technology is that it offers complete transparency.

Now we have come to realize that blockchain technology has numerous other applications in all major sectors of industry and life. For instance, blockchain technology can be applied to political voting systems to efficiently administer public voting procedures and carry out decentralized cloud-based functions that previously required jurisdictionally bound administration.

Blockchain technology has revolutionary potential for several sectors, such as finance, economies, exchange, and politics. Blockchain can record all assets held by all parties around the world.

In 2013, Ethereum launched blockchain technology as a decentralized platform that can run smart contracts. They said that blockchain can help developers store registries, create markets, and move data in coordination with the instructions provided.

Blockchain is also known as Distributed Ledger Technology (DLT)

Digital data may be captured and disseminated using blockchain technology, but it cannot be altered. Immutable ledgers and records containing transactions that cannot be changed, deleted, or destroyed are built on top of a blockchain. Because of this, blockchains are also referred to here as distributed ledger technology, or DLT, in short.

Decentralized security, as well as trust in blockchain technology, can be achieved in a variety of ways. A good place to start is that all new blocks are stored in chronological order. To put it another way, they are always tacked on at the "very end" of the chain.

Changing the contents of a block after it has been appended to the end of a blockchain is nearly impossible unless the majority of a network agrees to do so.

In addition to the hash of a preceding block and the time stamp described above, each block carries its own unique hash. Digital information is transformed into a series of numbers and letters using a mathematical function. The hash code will be altered if the data is changed in any way.

The technology that underpins Bitcoin, known as "blockchain," has gotten a lot of press recently. Transactions may be made in such a decentralized manner thanks to the unchangeable ledger provided by the blockchain.

There are now a lot of different ways to use blockchain, from financial services to systems for managing reputations to the Internet of Things.

While blockchain technology has several hurdles to overcome, such as scalability and security issues, it has the potential to revolutionize the world of finance.

How is blockchain different from traditional database models?

On the blockchain, the data is structured differently than in a traditional database. Here the information is grouped into sets known as "blocks." These blocks have a specific storage capacity once they are filled. They are very closely linked, forming a chain structure.

Blockchain stores encrypted blocks of data that are chained together to create a chronologically ordered, single source of truth for data. This data cannot be copied or transferred anywhere; instead, it is distributed.

The digital assets are decentralized on a blockchain, which allows for transparency and real-time access by the public. The integrity of digital assets is preserved in blockchains through a transparent ledger of changes.

What exactly is blockchain in the context of cryptocurrency?

The blockchain for cryptocurrency, also known as Bitcoin, is the public ledger where all transactions that have ever been executed are recorded. It is growing constantly because new blocks are being added by miners in chronological, linear order.

Each computer that is connected to the Bitcoin network contains a copy of the blockchain, which is updated automatically when a miner joins the network. A client performs the task of transaction validation.

Users of the blockchain who confirm whether a cryptocurrency transaction is valid or not are called miners, and this process of authentication is known as mining.

Why is blockchain the future? | Why do we require blockchain?

Blockchain is an open ledger that can be accessed at once by several parties. It has numerous benefits and advantages that make it a great alternative to traditional centralized data networks.

One of the basic benefits of blockchain technology is that the recorded data cannot be changed without the mutual agreement of all the users involved in the system. Since each new record becomes a new block, it contains a unique hash that identifies it.

Blockchain allows verification and traceability of multi-step economic transactions. It is a unique system that speeds up data transfer processing and reduces compliance costs. This technology can have numerous benefits in voting systems and on public platforms.

Here is the list of reasons why we need blockchain technology:

Types of Blockchain Technology

Blockchain has three basic types, which are explained below:

Blockchain Key Areas

Bitcoin and all other cryptocurrencies are based on blockchain technology.

Blockchain technology is a distributed public ledger where all transaction records and data are encrypted using cryptography techniques.

Every transaction in the bitcoin blockchain network is validated by most of the participants in a peer-to-peer network system.

Every block of blockchain is comprised of the following two parts:

Blockchain Wallet

A blockchain wallet is a digital application that enables users to trade, manage, and store their Bitcoins or other cryptocurrencies. This E-wallet service is provided by a blockchain company to users.This wallet allows users to transfer and store different cryptocurrencies. The users of this service can effectively manage their balances of Ether, Bitcoin, or other cryptocurrencies.

The blockchain wallet charges a certain transaction fee; this fee is dynamic and is based on the varying factors of transactions performed. The service is owned by the Blockchain company, which was founded by Nicolas Carr and Peter Smith.

Blockchain Login

To access your Blockchain wallet, navigate to the Blockchain wallet login page. Click the "Log in" button and put the following information in the right places.

  1. Your blockchain wallet ID
  2. Your password
  3. Any two-factor authentication that you have enabled

Your blockchain ID, which is also your username, is a set of random characters and letters.

How does Bitcoin's blockchain structure work?

The blockchain for cryptocurrency, also known as Bitcoin, is the public ledger where all transactions that have ever been executed are recorded. It is growing constantly because new blocks are being added by miners in chronological, linear order.

Each computer that is connected to the Bitcoin network contains a copy of the blockchain, which is updated automatically when a miner joins the network. A client performs the task of transaction validation.

Users of the blockchain who confirm whether a cryptocurrency transaction is valid or not are called miners, and this process of authentication is known as mining.

Blockchain technology has several other applications as well that go beyond financial markets and Bitcoin. These potential benefits extend into the social, political, scientific, and healthcare domains.

Coinbase Transaction on the Blockchain

Coinbase transactions in a blockchain cryptocurrency network are the first transaction in a block. This first transaction is created by a miner and is a unique type of bitcoin transaction. This transaction is a reward for the miner for mining a certain transaction in the bitcoin network. Any other transaction fee that is collected by the miner is added to this transaction.

In the bitcoin system, for every transaction that is executed, a block is added to the blockchain. Once a block is created and added to the blockchain, it becomes tamper-proof and immutable, which means that any bitcoin transaction record can never be removed or altered from the blockchain network.

Every block in the blockchain of bitcoin contains one or two transactions; the first transaction is known as a Coinbase transaction.

Blockchain Technology Applications

Blockchain technology enables us to efficiently and securely create a record of sensitive activities. This technology is fantastic for international payments and money transfers.

Aside from cryptocurrencies, blockchain has a wide range of other applications in the supply chain, financial services, and government. It provides immediate traceability, increased security, and transparency. The following are some of the blockchain technology's applications.

International Transactions

Because of globalization, business organizations are increasingly conducting cross-border transactions.Blockchain technology has the potential to bring about a revolution in this regard. It enables efficient and secure payments in cross-border transactions by eliminating intermediaries.

In the year 2018, Banco Santander launched the first ever blockchain-based money transfer service, Stander One Pay FX. This service uses Ripple xCurrent and allows customers to make fast international payment transfers.

By automating the whole process on the blockchain, Banco Santander has made the transaction process fast and efficient by reducing the number of intermediaries normally required in these transactions.

Capital Markets

Capital markets can significantly improve with blockchain-based systems. The following potential benefits of blockchain technology are identified by a McKinsey report:

A business start-up known as Axoni, which was founded in 2013, is committed to building solutions for capital market improvements using blockchain technology. The company has announced the launch of a type of ledger for the management of equity swap transactions. This will enable both sides of an equity swap to be synchronized throughout its life cycle while communicating changes to each other in real-time.

Other Applications of Blockchain Technology

There are some other applications of blockchain technology. Among those, some are famous: securing medical data, music royalties tracking, personal identity security, anti-money laundering tracking systems, etc.

Blockchain technology has several other applications as well that go beyond financial markets and Bitcoin. These potential benefits extend into the social, political, scientific, and healthcare domains.

For instance, blockchain technology can be applied to political voting systems to efficiently administer public voting procedures and carry out decentralized cloud-based functions that previously required jurisdictionally bound administration.

Blockchain technology has revolutionary potential for several sectors, such as finance, economies, exchange, and politics. Blockchain can record all assets held by all parties around the world.

Blockchain Versions

There can be unlimited applications of blockchain technology, such as in political, economic, and legal systems.

Potentially, blockchain can be an extremely disruptive technology with the capacity to reconfigure every aspect of human life and its operations.

For the sake of convenience and organization, blockchain technology has been categorized into three versions. These versions are categorized based on the existing and potential activities of the blockchain revolution.

Blockchain 1.0

Blockchain 1.0 refers to all applications of this technology related to cryptocurrencies. such as digital payment systems, remittances, and cash.

Version 1.0 of blockchain technology was introduced by Hall Finley. He implemented the distributed ledger technology, which was originally executed with the help of Bitcoin. This version of the blockchain is permissionless, as any participant is fully able to perform any valid transaction involving bitcoin.

Blockchain 2.0

Blockchain 2.0 is related to contracts. This version of the blockchain was launched because the first version had a problem. There was a lack of scalability in the network in the first version, and the mining of bitcoin was heavily wasteful.

Smart contracts in blockchain 2.0 are small computers that are linked together like a chain of blocks.These small computers run free programs that are automatically executed.

Blockchain 3.0

After the launch of the second blockchain version, another new version of blockchain technology was introduced called blockchain 3.0. The main feature of this version was the inclusion of decentralized apps known as DApps. These apps are conventional in programming; however, they use a decentralized communication and storage system, which can be Ethereum Swarm, etc.

Famous Myths about Blockchain

There are several myths surrounding blockchain. Some people think that blockchain is Bitcoin, or that it is unreliable, inefficient, or costly.

List of Famous Blockchain Technology Myths

Below are some of the common myths about blockchain and their correct explanations:

Myth No.1: Blockchain and Bitcoin are the same thing

The myth that blockchain and Bitcoin are the same thing is a false misconception.

Bitcoin is the first and most popular use case of a cryptocurrency that is created using blockchain technology. However, blockchain technology has a wide scope of usage beyond financial applications.

Myth No.2: Blockchain systems are inefficient and costly

This statement is also false to a large extent. The efficiency and cost of a blockchain depend on its structure. For example, most permissioned blockchain systems are comparatively more cost-effective than the alternatives.

Myth No.3: All Data Stored on a Blockchain is Public

This statement is true to some extent but can also be considered false. On a public cryptocurrency blockchain, every transaction is visible; however, the identity of parties in a transaction is represented by blockchain addresses, which appear as a string of random characters.

In a private blockchain, access is authorized by an administrator, like in any central database system.

Myth No.4: Blockchain is better than traditional databases

This myth is true to a large extent. Blockchain has many advantages over alternative database systems.

Myth No.5: Blockchain is impenetrable

This myth is false about blockchain. Although the blockchain's encryption hash and decentralized architecture improve system security, However, there are ways in which this system can be manipulated.

Myth No. 6: An advanced degree is required if you want to work with blockchain

This is another false myth surrounding blockchain technology. For building and using blockchain, there are many automated tools available in the market that can provide necessary assistance in leveraging blockchain technology.

Many blockchains allow users to develop applications in their choice of coding language.

Blockchain double-spending means spending money twice. Double spending is a potential disadvantage of blockchain technology, in which the same single digital token can be spent multiple times.A digital token consists of a digital file that can be duplicated.

How does Bitcoin handle the double-spending problem?

Bitcoin implements a confirmation mechanism and maintains a universal ledger called a blockchain. If double spending occurs, both transactions go into the pool of unconfirmed transactions, where many such transactions are already present.

The unconfirmed transactions are those that have not been picked up by anyone. Now the transaction that was first confirmed and verified will be valid. The other transaction will be pulled from the network.

Message for the Audience

It is not possible to cover all aspects of blockchain on a single page; this would be tedious and disorganized. As a result, I divided the entire blockchain course into the multiple articles listed below, which are well-known, including those just covered above.

Each of the topics mentioned above has its own article in which I define the topic in a brief and concise manner. Continue the course by clicking on any of the listed topics or by clicking the "Next tutorial" link directly after this paragraph. Thank you, and best wishes!

« CodesCracker.com Next Tutorial »

Liked this article? Share it!



Like/follow us on social media for updates!