To understand blockchain, let’s first look at this scenario.
One fine morning, you wake up and tune into your tv, and watch the news flashing, the local land registrar’s office accidentally caught fire, and the entire building, along with the land records, has turned down into ashes.
A panic starts engulfing your mind with thoughts of how the government will determine the ownership of the land as there are no records or copies of records anymore. If some of you are wondering what if the government would maintain the records digitally, would that solve the problem?
Let’s revisit the breakfast scene. This time news flashed, there was a massive data breach, and all the records were deleted by the hackers, or the records were deleted by the hackers, or worse, the records were altered with no trails, now what would you do?
You might be technically living in the house, but in the records of the government authorities, it doesn’t exist. To solve this problem, let’s introduce blockchain.
Blockchain technology is as simple as the two English words, “block” and “chain”, which combine to form “blockchain”.
In real life, a blockchain can be thought of as a box where information can be stored. You can also save transactions in this virtual box.
In our case, we will input all the land titles of our state in the block, and this first block will be known as the “Genesis Block”. Again on the next day when multiple land dealings will take place, all those will be recorded in the next block.
Now, this block is digitally sealed and signed with the help of hashing algorithm. What is hash algorithm is a topic of a different time. However, for the time being, you need to know that when the box is sealed, it will generate a hash, which is an alphanumeric number that represents the block and its content. It’s like a fingerprint; no two people can have the same one. The initial block’s hash will now be carried forward to the next block, and so on, cryptographically linking the blocks.
How does it solve the problem?
You bought a property, and that is recorded in one of the blocks. For example, the 5th block in the blockchain has it, and more blocks were added afterward. Now, a hacker tries to hack the blockchain and steal your property. If he gets inside the block and changes the land title from your name to his, as a consequence, the hash of that block will change, along with it, all the following blocks in the chain will get corrupted and get invalidated as the blocks are interlinked to each other. Thus, making it almost impossible to hack the chain, this phenomenon is known as immutability.
In case, if you’re still worried that the hacker might validate the entire blocks of the chain, after manipulating the data, the blockchain comes with one more feature known as a distributed ledger, which means the record is not contained in a single computer or with a single entity, rather, the ledger or copy of the ledger, is with multiple users (known as nodes), and they could be in thousands or millions in number to simplify it.
Suppose the ledger is held by all of our country’s local authorities, and now you can imagine the number of stores, units, and local governments that exist in our country. So, when you buy a house in Delhi, the transaction is authenticated and accepted by all of the network’s nodes or participants, and everyone gets a copy of the big ledger.
So now, if a hacker hacks the ledger with the local authority of Siliguri and changes the content of one of the blocks, this manipulation will not be accepted by the other participating nodes; they will send the correct copy of the ledger, which will replace the completed ones.
What’s inside the block?
If you’ve read this far, you already know that the block contains transactional data. What else?
- Timestamp: The time when the block was mined.
- Block number: The length of the blockchain in blocks.
- Hash: Hash of that block, when the block is mined or mined.
- Previous hash: Hash of the previous block.
- Nonce: “Number Used Only Once”, the magical number. Which helps in determining the hash value of that block.
There are few more data depending on the blockchain, it will vary. So, now you know what a blockchain is.
Written by: CA Suraj Kar
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