A basic overview of Bitcoin & Blockchain

I recently read the original paper for Bitcoin as I was curious to learn what exactly terms like Cryptocurrency and Blockchain meant. I went through many supporting resources to better understand the concept and it's working. Here's a short summary of what I gathered:

The biggest motivation behind blockchain is to create a decentralized, distributed system to store data securely. Blockchain, as the term says, is a chain of blocks; blocks being the data structure to hold information(which in this case would be transactions). Data in a block is encrypted and each block is given a name(hash key) which depends on the contents of the block. Each block knows the key of it's previous block. To put simply, blockchain could be visualized as a linked list, just linked using these hash keys instead of addresses.

Each node in the network keeps its own copy of the entire blockchain. Whenever new transactions are initiated, they first go to a pool of unconfirmed transactions. Miners would pull some transactions out and try to put them in a block. To do this, they need to solve a mathematical puzzle, and the first miner to complete this mines the block and he is rewarded. Solving the puzzle requires CPU resources, hence miners are encouraged to spend more resources in order to gain more rewards. The newly mined block is then broadcasted to the entire network, so that it could be validated and updated everywhere. The largest chain is considered as the correct chain, all further work is done using this chain.

As a copy of the entire chain resides on all nodes, it is essential to ensure a consistent copy is maintained. The hash keys are essential in this task. Each block knows the key of it's previous block. If any block gets tampered with, its hash key would change, but the original key is still present in the next block. This mismatch helps catch tampering, and the tampered block and transactions inside it are not accepted by the network. For an attacker to tamper with a network, he has to freshly mine all blocks succeeding a block, before any new blocks are created, to ensure his tampered data could be accepted, which is extremely difficult. This ensures data once entered is very difficult to change. Also underlining an important factor; the network will remain secure as long as the majority of resources are honest.

Honestly, there are a ton of other things to know about this technology, which I encourage others to read and share as well. Here's the link to the original paper: https://bitcoin.org/bitcoin.pdf

#blockchain #bitcoin

PS:- Search for Merkle Trees, its an integral part in cryptocurrencies!