Block Chain: History | Description | Applications | Bitcoin | Blockchain Roles | Case Studies
Definition of Blockchain
A blockchain is “a distributed database that maintains a continuously growing list of ordered records, called blocks.” These blocks “are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network. The primary benefit of blockchain is as a database for recording transactions, but its benefits extend far beyond those of a traditional database. Most notably, it removes the possibility of tampering by a malicious actor, as well as providing these business benefits:
- Time savings. Blockchain slashes transaction times from days to minutes. Transaction settlement is faster because it doesn’t require verification by a central authority.
- Cost savings. Transactions need less oversight. Participants can exchange items of value directly. Blockchain eliminates duplication of effort because participants have access to a shared ledger.
- Tighter security. Blockchain’s security features protect against tampering, fraud, and cybercrime.
Block Structure
The transactions made during a given period are recorded into a file called a block, which is the basis of the blockchain network. A block stores information. There are many pieces of information included within a block, but it doesn't occupy a large amount of storage space. Blocks generally include these elements, but it might vary between different types:
- Magic number: A number containing specific values that identify that block as part of a particular cryptocurrency's network.
- Blocksize: Sets the size limit on the block so that only a specific amount of information can be written in it.
- Block header: Contains information about the block.
- Transaction counter: A number that represents how many transactions are stored in the block.
- Transactions: A list of all of the transactions within a block.
- Version: The cryptocurrency version being used.
- Previous block hash: Contains a hash (encrypted number) of the previous block's header.
- Hash Merkle root: Hash of transactions in the Merkle tree of the current block.
- Time: A timestamp to place the block in the blockchain.
- Bits: The difficulty rating of the target hash, signifying the difficulty in solving the nonce.
- Nonce: The encrypted number that a miner must solve to verify the block and close it.
Data Storage in the Blockchain
Blockchain data is stored on a decentralized public ledger. The data on the ledger is stored in chunks called blocks, which are chained together using cryptography. Every block has a unique cryptographic hash as an identifier along with the previous block in the blockchain. Each transaction inside a block is timestamped and added to the ledger with each block. Each new block records all transactions and adds them to the previous one. The data stored on Blockchain cannot be altered or removed from the blockchain as it would require alterations on every subsequent block.
The miner who finds a solution for the proof-of-work puzzle (such as solving an equation by submitting correct answers) is rewarded with newly created bitcoins and has to add that block to the blockchain. But doing this takes time, so miners solve these puzzles using computer processors’ power, resulting in competition to solve these puzzles first.There are different storages to store data in the blockchain:
- Hashing: This is a cost-efficient way of storing the data in the blockchain. In this method, only the hash value of the data is stored in the blockchain. The raw data can be stored in the file system and the hash id of the blockchain will be attached to the raw data.
- TiesDB: This is an Ethereum-based decentralized application (dApps) to store non-financial data and search through their documents. This allows advanced search and document modifications.
- BigChainDB: This database allows developers and enterprises to deploy blockchain proofs-of-concept, platforms, and applications with a blockchain database. This offers immutable data storage, built-in-asset support, low latency, powerful query functionality, and high throughput, thus this is a database with blockchain characteristics.
- Distributed database: Distribute databases like MongoDB, Apache, and Rethink DB can be used to store data. They are quick and versatile, but they are not Byzantine verified. This means any hacker can corrupt the entire information base as all the hubs of the information completely trust one another.
- Decentralized cloud storage: Decentralized cloud storages allow for the storage of static data where data is not stored on the company server but instead on the devices of the renters. This storage can be used online thus making them fast and efficient but they are costly too.
- Interplanetary file system: This is a blockchain technology that breaks up data into shards and stores them in multiple instances. It is a peer-to-peer solution where the files get downloaded only if the person needs them. Thus, this is the address-dependent storage solution.
Participants of the Blockchain
Each blockchain network has various participants who play these roles, among others:
- Blockchain users. Participants (typically business users) with permissions to join the blockchain network and conduct transactions with other network participants.
- Regulators. Blockchain users with special permissions to oversee the transactions happening within the network.
- Blockchain network operators. Individuals who have special permissions and authority to define, create, manage, and monitor the blockchain network.
- Certificate authorities. Individuals who issue and manage the different types of certificates required to run a permissioned blockchain.
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