What is a Blockchain and how does it work?

What is a Blockchain and how does it work?

So in this Article, we’re going to have a look at what is a blockchain. Now, here is the fun part, the very technical part. So I hope I can explain this to you in a way that will help you understand everything about a blockchain. Now, I found this image here because I think it is one of the most easy to understand representations of a blockchain.

But before we start, just know that a blockchain is essentially a program.

It is a script of programming language that has been written that runs over the Internet. So when you hear block changes, no think in your head. It’s basically a program that runs between computers over the Internet. Now, the way a blockchain works is, as this image suggests, someone requests a transaction. Now, the requested transaction is broadcast peer to peer to the network consisting of computers known as nodes. Now, these nodes may be those mining farms that we saw earlier with people who have stacks and stacks of computers who were actually verifying that transaction through a program they’re running of their own.

Or it may be another system which we will go into further in detail later on on a computer node, just like my laptop that I’m using right now if I’m holding a set amount of tokens in a cryptocurrency wallet. Now, regardless of the type of node that node, that network of nodes then validates that transaction and the user status using known algorithms now. Now, those algorithms are embedded within the programs that the node operators are running on that particular blockchain out. The verified transaction can involve cryptocurrency contracts, records or other information.

So just because it’s called a transaction, we immediately think of as a financial transaction. But in block change, it may not always be a financial transaction. Just like this image here says it can involve the execution of a smart contract. It could involve a record changing or a data changing or some other form of information that is being stored on the blockchain.

Now, the next step once verified, once these nodes verify that their transaction is correct, the transaction is combined with other transactions to create a new block of data for the ledger. The new block is then added to the existing block chain in a way that is permanent and unalterable.

Now, what they mean by this is the way a block chain works is as the data is added to the distributed ledger, the data stacks on top of itself.That’s why it’s called a chain, because that chain of data just keeps adding, adding, adding up and the data below it never gets replaced.

It just keeps adding to form a string of chain or a long chain. Now, this chain, such as the Bitcoin block chain, is publicly available, which means that you can actually search and view every transaction that has ever happened on the block network since it very first began. And you will be able to view every transaction for eternity or for however long Bitcoin is ever usedfor.

Now here we are over on block chain dot info, which actually is a website that pulls data off the public bitcoin block chain that we were just talking about earlier. Now we can actually see live the information that is being processed on the Bitcoin block chain. Now, we can see here that aren’t which is a mining operation just sent seventeen thousand six hundred and thirty six bitcoins. We also have this thing called a search function where we can search for block site address, block hash, transaction hash and other information now without getting too technical.

The Bitcoin wallets on the Bitcoin network are publicly available, which means that if you know someone’s wallet address, you can search for that and you can actually see how much bitcoin they have in their wallet.

Now, the thing about Bitcoin is your identity is not necessarily tied to that wallet. So anyone can create a wallet at any time and you don’t need your personal identity. So you may not know who is behind those wallets, but you can see how much they have in there because it is publicly available information.

That’s how the Bitcoin block chain works.

We can even see here a live transaction counter. We can see the number of transactions that has been since the start of Bitcoin. And it’s still going up because, as we discussed before, that chain is being formed and those those transactions just keep adding on top. So at the moment, there’s been three hundred thirty two thousand nine hundred and seventy-three. Seventy four seventy five.

So these are live transactions happening on the Bitcoin network right now across the world, which is really amazing stuff. Now, here’s the most amazing thing about Bitcoin. As we discussed before, you can actually see how much Bitcoin is in people’s addresses live because this information is publicly available.  So we can.

See here, the top 100 richest Bitcoin addresses we can see here, this address currently has 1000. So it has 120000, 462 Bitcoin in it. Now, that’s real. That’s in that wallet. Now, if we work that out in Australian dollars, let’s actually see how much that is worth right now. So bitcoins around seven thousand five hundred. So that is nine hundred and three million dollars worth of Bitcoin in that wallet address. Now, I’ve just opened that wallet address simply by clicking on the link. And we can see here the address, the hash number. We can see how many transactions has happened in this wallet. We can see how much Bitcoin has been received to that wallet address over time. And this QR code is just a graphical representation of that wallet address. Now, we can see here the wall address has a number of random numbers and letters.

So when you create a Bitcoin wallet, it just automatically generates your own unique wallet address. Again, it is publicly available information, but generally no one will know it unless you actually give it to them. Or if you hold as much bitcoin as this address here, then people can actually see how much you have in there.

So down below here from this wallet, we can actually see the individual transactions this person hasundertaken. So we can see here they sent they sent 407 Bitcoin over here. They sent a thousand Bitcoin. We can see down here, actually, they received 408 Bitcoin. So, again, the public bitcoin block chain is publicly available information. Even though we can see this information, we don’t know who’s behind it. It is completely unshakeable. It’s just the way the block chain works.

One comment

Leave a Reply

Your email address will not be published.