Blockchain is built as a distributed, immutable, and decentralized ledger. According to the reference document, the core of a blockchain consists of a chain of blocks. Each block contains a set of data. The blocks are linked together using cryptographic techniques and form a chronological chain of information. Here’s a breakdown of how this is achieved:
Components of a Blockchain
| Component | Description |
|---|---|
| Blocks | Containers holding data (transactions, etc.) within the blockchain. |
| Data | Information stored in a block, such as transaction details or other relevant data. |
| Cryptography | Used to secure the blockchain by linking blocks and ensuring data integrity. |
| Chain | The sequential arrangement of blocks, creating a historical and immutable record. |
| Decentralization | Distributing the ledger across multiple nodes, enhancing security and transparency. |
Key Steps in Building a Blockchain
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Creating the First Block (Genesis Block): The blockchain starts with a genesis block, which is the first block in the chain. It's unique because it doesn't have a previous block to reference.
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Adding Subsequent Blocks:
- Each new block contains:
- Data: The actual information to be recorded (e.g., transaction details).
- Hash of the Previous Block: This links the current block to the previous one, ensuring the integrity of the chain. If any block is tampered with, its hash changes, and all subsequent blocks become invalid because they contain the wrong hash.
- Timestamp: Records when the block was created.
- Nonce: A number used in the mining process (Proof-of-Work) to find a hash that meets certain criteria.
- Cryptographic hashing algorithms (like SHA-256) are used to generate a unique fingerprint (hash) for each block.
- Each new block contains:
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Linking Blocks Cryptographically:
- As the reference explains, cryptographic techniques are essential for linking blocks together.
- Each block contains the hash of the previous block. This creates a chain where each block is connected to its predecessor.
- Any alteration to a previous block will change its hash, thereby invalidating all subsequent blocks. This ensures immutability.
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Decentralization:
- The blockchain is distributed across multiple computers (nodes) in a network.
- Each node has a copy of the entire blockchain.
- When a new block is added, it must be verified by a majority of the nodes in the network through a consensus mechanism (e.g., Proof-of-Work, Proof-of-Stake).
- Once verified, the new block is added to all copies of the blockchain. This ensures that the ledger is consistent across the network.
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Consensus Mechanisms:
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These are algorithms that ensure all nodes agree on the state of the blockchain. Common examples include:
- Proof-of-Work (PoW): Requires nodes to solve a complex mathematical problem (mining) to create a new block. The first node to solve the problem gets to add the new block to the chain and is rewarded with cryptocurrency.
- Proof-of-Stake (PoS): Nodes are selected to create new blocks based on the number of coins they hold and are willing to "stake" as collateral.
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Immutability:
- Once a block is added to the blockchain, it cannot be altered or deleted.
- This is because each block is linked to the previous block through its hash. Changing a block would require changing all subsequent blocks, which is computationally infeasible due to the decentralized nature of the blockchain and the consensus mechanisms in place.
Example
Imagine a simple blockchain for tracking ownership of a digital asset:
- Genesis Block: Contains initial information, such as "Asset created by Owner A."
- Block 2: Contains transaction data, such as "Asset transferred from Owner A to Owner B." This block includes the hash of the genesis block.
- Block 3: Contains transaction data, such as "Asset transferred from Owner B to Owner C." This block includes the hash of Block 2.
If someone tries to change the data in Block 2 to say "Asset transferred from Owner A to Owner D," the hash of Block 2 will change. This will invalidate Block 3 because it contains the original hash of Block 2. The network will reject the modified blockchain because it doesn't match the consensus of the other nodes.
