Blockchain
The blockchain’s gain in popularity may not be for a bad reason, it may well become the most prominent infrastructure existing to date. To set the right expectations, we’ll first need to understand how it works and what issues it is capable of solving.
This article summarizes and explains the use cases of blockchain as well as its inner functionalities. It will exhibit the process of solving algorithms, by hashing the data in permissioned and a permissioneless blockchain. The overview will include the basic concepts of how data is structured, providing existing types of data structures; Merkle Tree and a commonly referred to the concept of a Linked List.
It would be best to start by eliminating possible misconceptions that do not apply to blockchain. The blockchain contains and structures data, but it is not a typical centralized database. It does serve to exchange and verify information, but it is not an interface that the end-users can experience or interact with. It is governed by precise processes to make it secure, but it is not a firewall or an add-on implementation as a reinforcement. It is widely known in the world of cryptocurrency but not a trading platform, it will not fluctuate in value, it does not have a lifecycle, and after all, it is also fully independent. Simply put, blockchain is a data structure designed to be sustainable with speed and agility in mind, being 100% immutable and secure.
Is this true?
When it comes to manipulating data in general, the top priority is to ensure that its privacy and integrity are protected. As we know of pirating, the highest risk environments are at open seas, midway towards an exchange or a point of distribution. As humans are very clever and sometimes ill-spirited, we steal things, while being robbed at the same time by someone else. While not being me, or you, my dear reader, we are the accomplices of a crime that is called inflation. The overestimated valuation of the non-essential as our emotions are richer than us, and our own inner exquisite manipulation tactics, that blindly contribute to. We are not exactly zombies, because we are afraid of them. What do zombies do that we are so afraid of them, or what do they don’t do that we are afraid to turn into them? Our presence on its own has an impact, without us knowing. And this is the bias that should not exist in scientific data. How do you make your data immune, how do you validate that it is indeed what is being searched for? You use blockchain.
When sending a package through postal services, two things that are never neglected, are the shipping address, and the original sender’s information. In case of a failure to deliver, the package is returned to the sender. Blockchain uses similar clever methods but in its own way, the preceding and following blocks, all carry the ‘where-to’ and ‘where-from’ stamps bonded to its ‘waybill’.
Confusion happens when this type of safety is allotted to the general public. It sure seems doubtful, that a public ledger, which can allow access to its records, would satisfy the expectation of higher privacy. The public aspect, is exactly what makes it safe
It may seem doubtful at first, that an open to public ledger, allowing anyone to access its records would go hand in hand with insuring higher privacy standards. The public aspect actually makes it very difficult to trick the digital ledger in any way. Think of it as meeting strangers, and choosing a public location to do so. Blockchain records are public, each exchange is secure and the records are immutable.
As in any basic security and authentication process, once sent, the data is preceded by the block-header, basic example would be HTTP authentication. Moreover, the information contains critical data about itself and where it comes from. Keeping in mind that there are several blocks, presumably very long cue, and the ultimate goal is produce the sustainability of a chain.
The immutably within the ledger consists of few key elements that make up a single block.
The ledger is a list representing the hash of the transaction’s fingerprints. This is a very complex alpha-numeric sequence that is absolutely unique and will mutate if any of its pertinent details were to change, by any third party further down the line.
The time stamp, as well as version control, are the fundamentals in block technology, because these are basics to authenticate a transaction.
Besides the time-stamps, we need to use basic concepts when data is being transmitted, the most common is (POW), which is the Proof of Work. It consists of a Nonce, a unique alphanumeric sequence and (DOT), Difficulty of Target. The (DOT) levels vary in time and resources, depending on a type of data exchange scenario, which may require longer time for an algorithm to be solved.
In an example where the blocks precede one another, the next will always have a hash of the previous block. Hashes are long randomized strings that are impossible to retain, they are not storable and may take up to 10 minutes to generate.
If the information in one of the blocks was changed, not only it will affect the timestamps, and even going further, it will change the hashes transitioning between the blocks along the entire chain.
The proof of work on its own, is not the only safety mechanism that adds complexity, each block upon its creation requires ten minutes to validate. If several blocks were affected in one chain, it could take hours to process.
The technical challenges, and the impossibility to intervene in a process of blockchain operation with a malicious intent is due to the aspects, that can also cause inconvenience. The time constraints can be significant at times. However, these aren’t the deciding factors if the blockchain will be prevented from expanding further.
Although ledger technology has been around for quite some time, the nature of the increased surety in a blockchain data structure, is that everyone in the chain has the exact copy of the above mentioned ledger.
Needless to say, if one the block hashes was tampered or manipulated in any way, the hash flowing from block before or going to the next one, will be incorrect. It makes it impossible to modify all of the hashes as the amount of effort taken to unblock a transaction and the immense quantity of data being affected. All this makes it an impossible task to accomplish, regardless of technological or financial ability that one can have, with an ill intend to compromise the safety of this data structure.
Let’s talk about another feature set of blockchain. Permissionless and Permissioned. What are the key differences between each?
Permissionless blockchain, is very synonymous with a public record of all transactions and exchanges, the actual identities are kept private, but all addresses are still being listed.
Permissionless blockchain records are available to anyone, as well as a possibility to make a personal Node, contributing to the entire network, that will store ledger transactions, the history and will create new blocks synchronous with the records in progress.
We’ve quickly visited the concept of a consensus that happens every-time when a transaction is being initiated. As a transaction process starts, the records are joined amongst other transactions, eventually being picked up by the Node. At this point it is carefully verified with the Proof of Work solving algorithm. A complex operation that is performed by all of the Nodes on the network. The kind of task is usually a very elaborate crypto-graphic-hash puzzle, which can take vast resources and energy requirement to solve.
As soon as the Node(s) successfully solve the puzzle, this will automatically grant a creation of a new block, which is simultaneously broadcasted to all the other nodes within the network.
Let us now discuss concepts of a Permissioned blockchain. It is commonly seen in a kind of arrangement where the Nodes are within a smaller network, each have trust certificates amongst them. In a given scenario of a business having their own hyper-ledger fabric, also known as a pluggable consensus, which removes the need of POW, because there are already trusted links amongst them.
Something important to consider, that when it comes to a Permissioned block chain system, privacy is the top priority. Upon each transaction, the flow of information is distributed strictly on a need-to-know basis. As an example this could mean storing sensitive client or product data private and accessible to the parties that it strictly belongs to.
And last but not least concept of Permissioned block chain is what makes up for an entire success, as its key feature stands for efficiency. In a world of a multiple million of transactions that are happening daily, the automation will have an incredible role of sustaining increasing demand and rapid execution. This is what is known as Smart Contract concept. Let’s think of it as an assembly line where the raw goods are turned into finished products. These are then expedited to a retailer, or, directly to its client. That process will involve several parties, many control check points, that will assure the correctness of the operation. That is where convenience of a Smart Contract concept comes in. Once all of the criteria is met, it will automatically execute. Should there be any sort of discrepancies, the transaction will be cancelled, and refunded in its entirety.
Let’s now have a look at the most intricate aspects of blockchain, as well as the inner workings, and discuss it’s core technicalities. The question often raised, is blockchain a Linked List data structure?
First, what exactly is a linked list?
Linked list:
A linked list consists of data collection inside a node which can be sporadically distributed all across, representing a hash. The one feature of linking the data to a cohesive assembly, are the pointers. These are the variables containing addresses of the next data node.
The similarities of the two data structures are that both contain data, in case of block chain, is a list of transactions and the header. A header containing information a previous block. The future coming block are attributed by complex algorithms executed by node.
Unlike blockchain, a linked list will have its pointers set to up and coming data but not the other way around as it an uneasy process of backtracking (reverse traversing) to previous node, unless starting the operation from the beginning.
Therefore a solid answer, unlike few similarities of a blockchain with linked lists structure, these are not the same. A visual representation would be an actual network being blockchain in comparison to a single strand of data such as a linked list.
The best way to describe the inner mechanics of blockchain is to visit a concept of Data Trees. Let’s specifically discuss Merkle Tree data structure and how it works as well as, why it is being used in relation with blockchain.
In a nutshell a tree data structure will have its root, branches and leafs. Merkle tree implantation will have ending nodes, called leafs, middle nodes, are branches and finally at the top we have a root.
Merkle Tree:
The data tree is built from hashes of each element moving upwards.
Merkle tree data structure is not anything exclusive to blockchain, there are other effective uses of it amongst well-known Git and Amazon Dynamo DB.
Core principle and the function consists of collecting the data, hashing it and storing into the nodes, called the leafs. Once on a leaf level, the hashed data is being paired up and hashed again, now on the branch level. The process repeats, until the hashed data is combined reached the top, which is the root. That said, the data itself does not represent the Merkle Tree, it’s the hashes of the given data and the attributes.
The reasoning to use Merkle tree instead of hashing each data element separately has a fundamental advantage. The only trusted data hash is the root, to verify a single data element, all of the other elements also need to be inspected, and insure that the date was not tampered with. That could be lengthy and inefficient process. Unlike a linear approach of validating each data element, the tree structure only needs fewer steps to attain its root and testify that the date is in its original state and has not been tampered with.
In conclusion, blockchain technology is the safest way to distribute and protect data from any alteration. This will be have an essential role, to protect private and sensible data. Besides financial industry, potential uses could be in science, medicine, military and education. The cleverness of its design can have various benefits, first being openly public, and an absolute guarantee of no data tampering, which will significantly reduce malicious activities such as identity thefts and compromised data.
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