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Blockchain

cryptocurrency distributed-systems security

What is Blockchain?

Blockchain is a distributed, decentralized ledger technology that records transactions across many computers in a way that makes the records resistant to modification. Each block contains a list of transactions and a reference to the previous block, forming a chain of blocks that cannot be altered without changing all subsequent blocks and gaining consensus from the network.

Simple Analogy

Think of blockchain like a class of students sharing notes:


  • Traditional System: In a traditional system, only one student (the teacher) keeps the class notes. If they make a mistake or deliberately change something, no one else would know.

  • Blockchain System: Imagine instead that every student in the class has an identical copy of the class notes.

When new information needs to be added:

    • The information is collected into a “page” (block)
    • Everyone in the class verifies the information is correct
    • Once most students agree it’s correct, everyone adds the page to their notebook
    • Each new page includes a special code from the previous page, creating a chain
    • Everyone’s notebook should be identical at all times

If someone tries to change old information in their notebook:

  • The special codes linking the pages would no longer match up
  • Their notebook would be different from everyone else’s
  • The class would reject their altered version

This makes blockchain very secure against tampering because a cheater would need to:

  • Change their own copy
  • Convince more than half the class to accept their changed version
  • Do this faster than new pages are being added

This is practically impossible in a large class, making the blockchain extremely secure against tampering. Just as you can’t change page 5 of everyone’s class notes without them noticing, you can’t alter a block in the blockchain without breaking the entire chain.

Key Concepts

  • Decentralization: No single authority controls the blockchain

  • Transparency: Anyone can view the entire blockchain

  • Cryptography: Secure mathematical techniques protect the data

  • Mining: The process of validating transactions and adding new blocks (in some blockchains)

  • Distributed Ledger: Like having every student in class with an identical copy of the class notes, all synchronized to contain the same information.

  • Blocks: Similar to pages in the class notes, each containing a list of transactions and a reference to the previous page.

  • Hash: A unique fingerprint for each page that includes information from the previous page, making it impossible to change a single page without affecting all subsequent pages.

  • Consensus Mechanism: The process by which everyone agrees on what new information should be added to the notes, like the class voting on what to include in today’s lesson summary.

  • Decentralization: No single student controls all the class notes, just as no single computer controls the entire blockchain.

  • Immutability: Once information is recorded in the notes, it cannot be changed without being detected by everyone else, just as you can’t change an old page without everyone noticing the inconsistency.

  • Public/Private Keys: Like a special signature system where you can prove you wrote certain entries in the notes without revealing your identity.

Example

When you send Bitcoin to someone, the transaction is broadcasted to the network.


Miners group your transaction with others into a block, solve a difficult math puzzle (proof of work), and add the block to the blockchain. Once added, your transaction is confirmed and visible to everyone, making it practically impossible to reverse or tamper with.