Blockchain and bitcoin
In the last article we discussed in short SHA256 and its history, as well as a short introduction to the technology. We can’t talk about bitcoin and mining without mentioning another key pillar of this industry and that’s Blockchain!
Blockchain is a decentralized, digital ledger that records transactions across a network of computers. It is a highly secure and tamper-proof technology that is revolutionising a wide range of industries.
At its core, a blockchain is a chain of blocks, each block contains a number of transactions. When a new transaction is added to the blockchain, it is added as the most recent block. Each block is linked to the block preceding it, this creates a chain of blocks that stretches all the way back to the first block, which is called “the genesis block.”
One of the key features of blockchain technology is that once a block is added to the chain, it becomes immutable, it cannot be altered or deleted. This is because each block contains a unique “hash,” (we spoke a little about this in the sha256 article) the hash is a string of characters that serves as a sort of digital fingerprint for the block. If someone were to try to alter the contents of a block, the hash would totally change due to the avalanche effect, this would make the block and all the blocks that follow it invalid.
Another key fundamental of blockchain technology is that it is decentralized, meaning that there is no central authority controlling it. Instead, the blockchain is maintained by a network of computers, these are known as “nodes,” the nodes work together to validate and record transactions. When a new transaction is added to the blockchain, it is broadcast to all the nodes in the network. The nodes then work together to validate the transaction in a majority ruling scenario, then it is added it to the most recent block confirming it via the network.
The most well-known application of blockchain technology is Bitcoin, Bitcoin is a digital currency that uses blockchain to record transactions. However, the potential uses for blockchain technology go far beyond digital currencies, as immutable decentralised networks take away the issue of trust and provide full transparency. Bitcoin is a digital currency that uses blockchain technology to record and verify transactions. At its core, Bitcoin is a decentralized system that allows for peer-to-peer transactions without the need for a centralised institutions such as banks.
When we send Bitcoin to someone else via an exchange or wallet, we are broadcasting the transaction to the network. Nodes (computers) connected to the network are known as “miners,” the miners then compete to validate the transaction by solving a complex mathematical problem (essentially decoding). The first miner to solve the problem adds the transaction to the most recent block and is rewarded with a small amount of Bitcoin.