What is Blockchain Technology in 2023? Explained with applications.

Blockchain Technology in 2023

A blockchain is a decentralized, distributed ledger that records transactions on multiple computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.

This allows for secure and transparent record-keeping, as each block contains a unique code called a "hash" that allows for the verification of its authenticity. In addition, each block contains the hash of the previous block, which links them together and forms the "chain" in the blockchain.

One of the most well-known applications of blockchain technology is the creation of cryptocurrencies such as Bitcoin, which use the technology to secure and verify transactions without the need for a central authority.

However, the potential uses of blockchain technology extend far beyond the realm of digital currencies. It has the potential to revolutionize a wide range of industries, from supply chain management and voting systems to healthcare and real estate.

One of the key advantages of blockchain technology is its ability to ensure the security and immutability of data. Since the data on a blockchain is distributed across a network of computers, it is incredibly difficult to tamper with or alter in any way. This makes it an ideal technology for applications that require a high level of security and trust, such as the handling of sensitive financial or personal information.

In addition, the use of decentralized networks and consensus-based algorithms ensures that the decisions made on a blockchain are transparent and verifiable by all participants. This makes it a potentially valuable tool for applications that require a high degree of accountability and trust, such as supply chain management or voting systems.

The potential uses of blockchain technology are almost limitless, and it is already starting to have a major impact on various industries. As the technology continues to evolve and mature, it is likely that we will see even more innovative and groundbreaking applications in the future.

Summary: Let me help you to remember the basic concepts more easily:

1: What is blockchain?
Answer: Blockchain is a secure distributed ledger (data structure or database) that maintains a continuously growing list of ordered records, called “blocks”, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.

By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".

Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.

Q2: Explain the common structure of blockchains
Answer: Blockchains are composed of three core parts:

Block: A list of transactions recorded into a ledger over a given period. The size, period, and triggering event for blocks is different for every blockchain.

Chain: A hash that links one block to another, mathematically “chaining” them together.

Network: The network is composed of “full nodes.” Think of them as the computer running an algorithm that is securing the network. Each node contains a complete record of all the transactions that were ever recorded in that blockchain.

Q3: What is the blockchain data structure?
Answer: Basically the blockchain data structure is explained as a back-linked record of blocks of transactions, which is ordered. It can be saved as a file or in a plain database. Each block can be recognized by a hash, created utilizing the SHA256 cryptographic hash algorithm on the header of the block. Each block mentions a former block, also identified as the parent block, in the “previous block hash” field, in the block header.

Q4: What is the Genesis Block?
Answer: The **first block in any blockchain **is termed the genesis block. If you start at any block and follow the chain backwards chronologically, you will arrive at the genesis block. The genesis block is statically encoded within the client software, that it cannot be changed. Every node can identify the genesis block’s hash and structure, the fixed time of creation, and the single transactions within. Thus every node has a secure “root” from which is possible to build a trusted blockchain on.

Q5: What is blockchain transaction?
Answer: Transactions are the things that give a blockchain purpose. They are the smallest building blocks of a blockchain system. Transactions generally consist of:

a recipient address,
a sender address,
and a value.
This is not too different from a standard transaction that you would find on a credit card statement.

A transaction changes the state of the agreed-correct blockchain. A blockchain is a shared, decentralized, distributed state machine. This means that all nodes (users of the blockchain system) independently hold their own copy of the blockchain, and the current known "state" is calculated by processing each transaction in order as it appears in the blockchain.

Q6: What is the purpose of a blockchain node?
Answer: A blockchain exists out of blocks of data. These blocks of data are stored on nodes (compare it to small servers). Nodes can be any kind of device (mostly computers, laptops or even bigger servers). Nodes form the infrastructure of a blockchain.

All nodes on a blockchain are connected to each other and they constantly exchange the latest blockchain data with each other so all nodes stay up to date. They store, spread and preserve the blockchain data, so theoretically a blockchain exists on nodes.

A full node is basically a device (like a computer) that contains a full copy of the transaction history of the blockchain.

Q7: Why does Blockchain need coins or tokens?
Answer: Tokens/Coins are used as a medium of exchange between the states. They are digital assets built in to perform a specific function within a blockchain.

When someone does a transaction, there is a change of state, and coins are moved from one address to another address. Apart from that, transactions contain some additional data; this data can be mutated through the change of state. For this reason, blockchains need coins or tokens to incentivize the participants to join their networks.

Q8: What is proof-of-work?
Answer: A proof of work is a piece of data which is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements. Producing a proof of work can be a random process with low probability so that a lot of trial and error is required on average before a valid proof of work is generated. Difficulty is a measure of how difficult it is to find a hash below a given target.

Q9: What is deterministic behavior?
Answer: If A + B = C, then no matter what the circumstances, A+B will always be equal to C. That is called deterministic behavior.

Hash functions are deterministic, meaning A’s hash will always be H(A).

Hope it helps!

If you are interested to learn more, stay in touch via my LinkedIn and GitHub profiles:

Muhammad Asadullah (Ravian)
https://www.linkedin.com/in/asadravian/
https://github.com/asadravian