In this post, we will find the definition of Blockchain, the steps of a Blockchain, and its key components.
What is Blockchain? | Definition of Blockchain
Blockchain is a distributed database or digital ledger that maintains a continuously growing list of blocks. Each block contains a set of verified transactions that have taken place during a set time period, usually 10 minutes, and once a block is filled, it’s added to the chain.
Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. It also contains Nonce. A nonce is a random number used in cryptographic mining to create a valid block.
Blockchain is a decentralized system, meaning no single entity controls it. This makes it inherently resistant to tampering and censorship.
Blockchain Steps| How Does it Work?
- Transaction Creation: – A transaction occurs, such as sending cryptocurrency from one person to another. This transaction data is prepared in a specific format.
- Block Creation: A collection of verified transactions is grouped together into a block. The block includes a unique identifier (hash), a timestamp, transaction data, and often a reference to the previous block.
- Mining: This is the process of verifying and adding a block to the blockchain. Miners (computers) compete to solve a complex mathematical puzzle. The first miner to solve the puzzle adds the block to the chain and is rewarded with cryptocurrency (in the case of Bitcoin).
- Verification and Addition: Once a block is mined, it’s added to the end of the blockchain. All nodes in the network verify the block’s validity and add it to their copy of the blockchain.
- Immutability: Once a block is added, it’s extremely difficult to change. Altering a block would require changing every subsequent block in the chain, which is computationally infeasible due to the network’s size and the complexity of the cryptographic algorithms involved.
Key components
- Blocks: These are containers for transaction data. They also contain a timestamp, a cryptographic hash of the previous block, and a nonce (a number used only once in cryptographic computations).
- Transactions: These are the records of events or asset transfers. They include details like sender, receiver, and amount.
- Hash: A cryptographic hash function converts data into a unique string of characters. It’s used to identify and verify block data.
- Nonce: A nonce is a random number used in cryptographic mining to create a valid block.
- Merkle Tree: A data structure used to efficiently verify the integrity of the data within a block.
