Everything about BlockChain
What is BlockChain, why do we need blockchain and what problems does it solve?
Blockchain? what is that? Is it a chain? Yep, it is. It is a chain of blocks of data.
But, before defining a blockchain, let's try to understand the reason why we need a blockchain. And what problems does it solve?
Why do we need a blockchain?
First, let's try to understand the meaning of "centralized systems".
Centralized system
A centralized system is a network of computers that depend on the main computer (i.e. central point), also known as a server. All the data is stored and controlled by this server.
Problems of Centralized system
What is wrong with a centralized system? What are the problems that a centralized company could face in the long run?
Here are some of them:
The nodes (i.e. computers) participating in this network depend on a single server. So, this provides hackers with a small surface area which makes it easier for them to attack and exploit a server.
A server is controlled by a few people in an organization who could always exploit the server. Thus, a server is prone to get attacked by the internal members of an organization.
Servers are highly dependent on a network connection. If a server goes down due to connectivity issues then all the nodes depending on that server go down with it.
How Blockchain technology can solve these problems
Blockchain is a decentralized network. Hence, it does not have a central authority responsible for managing and distributing data. Instead, the data is distributed (i.e. duplicated) to the nodes participating in this network.
The participating nodes are the ones who manage a blockchain network.
So if any node tries to change the data, then this modification has to be validated by the other nodes. And, if the other nodes find out that this modification is incorrect then they will reject it.
Blockchain can tackle network issues as it consists of many nodes. So, the entire network won't be affected if a single node goes down.
What is a blockchain?
Blockchain is a public database for storing real-world data, shared and updated with many nodes (computers) across the globe.
Let's break this down in simple terms. The word "blockchain" consists of two parts: block and chain.
"Block" is an entity that stores any real-world data. For convenience, let's assume that a block stores the transactions happening on the internet. If Harry sends 5 ETH (Ethers) to Peter, this transaction needs to be added to a block to be successful.
"Chain" can be defined as a cryptographic link of a block with the previous block. In other words, the link between blocks forms a chain of blocks. So, to sum it up, a blockchain is a collection of blocks chained together using cryptography.