{"id":6978,"date":"2018-10-22T19:28:21","date_gmt":"2018-10-22T13:58:21","guid":{"rendered":"https:\/\/www.konstantinfo.com\/blog\/?p=6978"},"modified":"2026-02-25T17:45:01","modified_gmt":"2026-02-25T12:15:01","slug":"beginners-detailed-guide-blockchain","status":"publish","type":"post","link":"https:\/\/www.konstantinfo.com\/konstant-blog\/beginners-detailed-guide-blockchain\/","title":{"rendered":"A Beginner\u2019s Detailed Guide to Blockchain"},"content":{"rendered":"

Blockchain at this point is a technology that almost everyone\u2019s heard of but few people actually understand. If you ask around, \u201cIt\u2019s a kind of decentralized ledger<\/em>\u201d- is the most common and to some extent, a reasonably accurate definition you would find. But the problem is, this definition poses more questions than it solves. What\u2019s a public ledger anyway? If it\u2019s public, who manages it? How can they be trusted? And perhaps most importantly- Why do we even need it? Isn\u2019t our current system just fine? We will try and answer each one of them over the course of this discussion but let\u2019s fist get down to the basics.<\/p>\n

The original sin<\/h2>\n

Internet has been the most remarkable development of the last century- from its conception to rapid evolution and subsequent adoption by half the global population is a phenomena unparalled by any other invention. But in the rush to make information widely available, we overlooked one of its fatal flaws- the centralized design. At this point, almost all the personal and business data sensitive to snooping and leakage is stored on third-party clouds owned and operated by multinational corporations like Amazon, Google, Microsoft, among others.<\/p>\n

As Brian Behlendorf- creator of the Apache Web Server puts it, Internet was conceptualized to be decentralized but its centralized design in implementation was the original sin. Not only has it put businesses in control of user data- which is bad at many levels, but has also made vulnerable entire systems relying on such architecture. Blockchain aims to right that wrong- to give back the control of user data to users themselves.<\/p>\n

Enter Blockchain:<\/h2>\n

The earliest description of the concept- timestamps, on which Blockchain functions, can be traced back to 1991. But it wasn\u2019t until 2008 that a formal paper was published describing the technology and was subsequently implemented in 2009. The invention is attributed to the author of that paer, Satoshi Nakamoto- a person or a group of people who remain unidentified till date.<\/p>\n

The first implementation was that of building a distributed public payments network that had its own unit- Bitcoin. This was later termed by US Treasury as a decentralized virtual currency which later gained the title of cryptocurreny. As of now, there are dozens of cryptocurrencies in the market but their actual worth and legal status remains disputed. But we have an important point to make here- because cyptocurrency was the first application of Blockchain, they remained inseparable for a very long time and it is only in recent years that Blockchain is being seen as an independent technology with limitless possibilities beyond crptocurrencies.<\/p>\n

What\u2019s special about Blockchain:<\/h2>\n

We will get to the operational features of Blockchain in a moment but let\u2019s first take a look at what exactly makes it such an appealing technology:<\/p>\n

Decentralized<\/h3>\n

No central authority controls the data.<\/p>\n

Transparent<\/h3>\n

The system is open for anyone to see and participate.<\/p>\n

Immutable<\/h3>\n

Data once written can\u2019t be modified or deleted.<\/p>\n

Let\u2019s create a Blockchain<\/h2>\n

The words Block and Chain were used separately in Satoshi Nakamoto\u2019s original paper indicating Block as a component and Chain as a process. So we\u2019ll follow the same lead here:<\/p>\n

A Block<\/h3>\n

A block contains two components- the transaction data and the block header.<\/p>\n

For a crptocurrency transaction, data would be the sender\u2019s address, the receiver\u2019s address and the amount to be transferred. As for the header, it contains four components:<\/p>\n

Hash of the block<\/h3>\n

Hash is generated through SHA-265 algorithm and is meant to ensure data integrity.<\/p>\n

Hash of the previous block<\/h3>\n

The use of the hash of previous block is to verify the state of the database.<\/p>\n

Timestamp<\/h3>\n

It indicates the time at which the current block was hashed.<\/p>\n

There are also two other components- target difficulty and nonce, which will skip here for the sake of simplicity.<\/p>\n

\"timestamp\"<\/p>\n

Image Credit: youtube.com\/watch?v=SSo_EIwHSd4<\/p>\n

As you would know, generating hashes requires a lot of computational resources- this lies at the heart of the entire Blockchain operation. To create or to mine a block, miners need to solve a complex mathematical problem. The one who solves it first, get a reward, and the Block is used to store transactions. Different Blockchains have their algorithms for deciding how many Blocks can be mined per unit time by adjusting its difficulty level and nonce. Bitcoin for instance, allows one Blocks to be mined every 10 minutes while for Etherum, it is around 15 seconds.<\/p>\n

Chain \u2018em up<\/h2>\n

The first block in a chain is called the genesis block and it is mined during the creation of Blockchain or at ICO\u2019s for cryptocurrencies. The first block of Bitcoin was mined by Satoshi Nakamoto in 2009 and as you would expect, the genesis block doesn\u2019t have a hash of the previous block.<\/p>\n

\"chain<\/p>\n

Thereafter, every time a new block is mined, it is linked to the previous Block and added to the Blockchain. If two or more blocks are forked at the same time, there are different consensus mechanisms to overcome the issue and only one is added. The point is, if you start backtracking from the latest block in any Blockchain, you would eventually reach the genesis block- thus the name chain.<\/p>\n

Who verifies new blocks?<\/h2>\n

Unlike our current architecture where a central database stores and verifies all transactions, Blockchain relies on several hundred or thousands of nodes and miners spread across the globe for the task. While the nodes store the latest state of the leger, miners commit all the changes.<\/p>\n

\"new<\/p>\n

When any miner gets a new Block, they club all the transactions in that Block and add it to the Chain. For each new update, nodes independently verify its hash and the hash of the previous block. If it\u2019s valid, they commit the transaction and update the state of their ledger.<\/p>\n

\"new<\/p>\n

Failsafe<\/h3>\n

Now there are two possibilities of conflicts here- if a malicious user alters any transaction, the hash of the corresponding Block would also change- which would conflict with the header of the next Block. Thus it would be rejected.<\/p>\n

There is also possibility that two or more miners get a block at the same time. In this case, different Blockchains use various consensus mechanisms to sort out the discrepancies and only one of them is rewarded. Generally, when more than half of the nodes commit to any particular transaction, all the nodes must update their ledgers to reflect that change.<\/p>\n

\"failsafe\"<\/p>\n

How is it trustworthy?<\/h2>\n

No technology is bulletproof but Blockchain is far more secure than our current client\/server model, especially given the level of transparency it offers. There are basically two ways you can exploit any system:<\/p>\n