Blockchain for Dummies: What Is Blockchain Technology?
Cryptocurrencies are on-demand, and with them, blockchain technology gets more popular. So before you invest in tokens, you need to understand what this technology is all about. Keep reading the new StealthEX article and find everything about blockchain for dummies.
How Does Blockchain Work for Dummies?
Blockchain is a chain of blocks of information linked together. Each successive block stores information about the previous one.
In cryptocurrency blockchains, blocks store information about transactions. They contain a timestamp and other service information. The data in a block that has already been added to the blockchain cannot be changed.
Usually, a block has only one follower and one predecessor. But there are exceptions:
- The genesis block, the first block in the chain, has no predecessor.
- The last (at the moment) block in the chain has no followers.
After a hard fork (a fundamental software update), the chain can split into two. Then the block on which the hard fork took place will have two followers. Each of the two chains will go its own way.
A blockchain is a distributed database that is organized as a chain of blocks. Blockchain info is stored simultaneously on multiple nodes. Information about a new block spreads across them so that the nodes always reflect the current state of the network. They protect it from attacks, hacking, and changing information.
How Is Communication Between Blocks and Data Security Ensured?
For the next block, the hash is computed from the data of the previous block. It’s a special encrypted string of characters.
If someone tries to change one of the blocks that have already been added to the blockchain, the hashes of all the following blocks will be invalid. After all, the hash of each new block is created based on the information about the previous block, including the hash it contains. So, if you change even one bit in the chain, it will become invalid. It’s easy to find which block has been changed.
Decentralization Is the Most Important Factor in Blockchain Technology
Each blockchain has its characteristics. However, they all share the idea of decentralization.
A blockchain has no control center that controls its operation. All nodes have equal rights.
The system works through protocols and algorithms. Human error is also eliminated because the software makes the decisions.
This is the value of blockchain technology. They are independent of authorities, companies, etc. If someone wanted to take over a blockchain, they would have to control more than half of its nodes or capacity. And that is expensive and therefore pointless.
Blockchain Validation Methods and Consensus
In this case, validation is a verification of the authenticity and correctness of a transaction (an operation to transfer information, most often about transferring funds, from one participant in the network to another). Consensus is a certain agreement that nodes must reach.
In cryptocurrency-related blockchains, nodes validate the sending of funds. They use public and private keys for validation. The former is stored in the blockchain. It often acts as the address of the cryptocurrency wallet and can be known to everyone. The private key is available only to the owner.
If the sending information is correct and the user did not try to spend the same cryptocurrency twice, the node or multiple nodes confirm the transaction. Data about it is added to the block. A hash is calculated from it, as well as information about the previous block. It is also added to the block, and then the block replenishes the chain.
Finding the hash is quite difficult, but it’s easy to check if it’s correct. It’s up to the miners to find the hash.
How Mining Works in Blockchain?
It is difficult to fully explain blockchain technology for dummies without understanding mining. Modern blockchains most often use two consensus algorithms, such as Proof of Work (PoW) and Proof of Stake (PoS), and mining is used in the first one.
In PoS, coins are counted as mined and regularly distributed to participants according to how much cryptocurrency they have in their wallets.
In PoW, to calculate the hash of the next block, miners must go through billions of numbers one by one and find the minimum value that satisfies the conditions of the problem described in the cryptocurrency protocol. You have to find a solution to the equation, using tremendous computing power, which is capable of quickly going through the options.
The first miner to find the hash gets the reward. The other nodes can only verify that the hash is correct and confirm that a new block has been added to the blockchain. If the other miners realize that the hash is calculated incorrectly, they will not accept it and add it to the base.
Summary of Blockchain Technology for Dummies
All in all, understanding how blockchain works is a challenging task. It’s a secure system that has no control center and doesn’t depend on anyone. Blockchain is controlled by software algorithms and is self-regulating.
Blockchains were launched for cryptocurrency functioning. However, they can do much more. Learning Bitcoin and blockchain for dummies, you should know that it already helps to make instant payments with low fees, organize voting, sell goods and services, run mining and logistics companies, etc. Blockchain is universal because it can be implemented anywhere. That’s why it has a huge future.
Where to Buy Crypto?
And finally, if you are interested in blockchain technology and decide to buy some crypto coins turn to an instant crypto exchange StealthEX. This service is free from registration and does not store users’ funds on the platform.
Just go to StealthEX. It will automatically guide you to the «Swap crypto» window.
- Choose the currencies you would like to swap. For example, BTC to ETH.
- Enter your crypto wallet address.
- Send the deposit to the address generated by StealthEX.
- Once the deposit will be received, you will get your exchanged funds to the address provided in Step 3.
You can also buy ETH with your debit or credit card. To do so, you need to open the «Buy crypto» window instead of «Swap crypto».
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