What is blockchain? How does it work? How are cryptocurrency transactions secured?
In simple terms Blockchain is the combination of different blocks which makes a promising and transparent transaction of digital currency, it's called distributed ledger technology.
Whenever the transaction occurs all the information is stored in a blockchain that can’t be manipulated or altered by an organisation and any sort of computer because every block has a hash or some information from the previous block.
BLOCKCHAIN EXPLAINED: A QUICK OVERVIEW
A blockchain is a database that stores encrypted blocks of data then chains them together to form a chronological single-source-of-truth for the data
Digital assets are distributed instead of copied or transferred, creating an immutable record of an asset
The asset is decentralized, allowing full real-time access and transparency to the public
A transparent ledger of changes preserves the integrity of the document, which creates trust in the asset.
Blockchain’s inherent security measures and public ledger make it a prime technology for almost every single sector.
➡Block consists of 3 important concepts
-Blocks. - Miners. - Nodes
➡Blocks: every chain consist of multiple blocks and each block has 3 basic elements
-The data in the block
-A 32- bit whole number called nonce it's randomly generated when the block is created which generates the block header hash.
- The hash is 256- bit combined with the nonce.
When the first block of the chain is created, a nonce generates a cryptographic hash. The data in the block is considered to be signed and forever tied to the nonce and hash unless it is mined.
➡Miners are created new blocks on the chain through a process called mining.
Every block has its unique nonce and hash but also has a hash of the previous block in the chain.
Miners have special software to solve the incredible math problem of finding a nonce that generates an accepted hash. The nonce is 32 bit and hash is 256 bit so there are roughly 4 billion possible nonce hash combinations that must be mined before the right one is found.
➡Nodes maintain copies of the blockchain and keep the network function. Each user is given a unique alphanumeric identification no. that shows their transaction.
The transaction of each user has been secured in a complex and unaltered algorithm which makes the transaction appear so flexible and feasible so, there would be less possibility to exploit the secure network. Having an undisputed network it's decentralised and no authority has the power to control it. Set of blocks accessible to all the users is called a public ledger and no one can betray the transaction. Let's explain this with an example.
Neema wants to transfer bitcoins to Monica, lets say Neema has 2 bitcoins so Neema transaction is recorded in a block that keeps a data of no. of bitcoins sent along with Neema and her unique wallet address through a hash algorithm.
Hash encryption algorithms contain transaction details that are encrypted using an encryption algorithm and using Neema’s private key.it transfers to a digitally signed transaction then transmitted worldwide by Monica’s public key. The message can be decrypted by a Monica private key that contains all the information related to the transaction.
