WEBVTT

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BASIC CONCEPTS OF BLOCK CHAN

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At its core, blockchain is a type of database,

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but it differs significantly from traditional databases

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in how it stores and manages data.

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Blockchain organizes data in blocks,

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and these blocks are then chained together

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using cryptographic principles.

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Blocks. Each block contains a collection of data.

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For example, in the case of Bitcoin,

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a block includes information about transactions.

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Once a block is filled with data,

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it is sealed and linked to the previously filled block, forming a chain.

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Blocks as data containers.

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In blockchain technology, a block is like a digital ledger sheet,

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recording a series of transactions or data entries.

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For instance, in the Bitcoin blockchain,

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each block contains a list of all recent Bitcoin transactions.

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Example, consider a block in the Bitcoin blockchain as a page in a ledger.

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If Alice sends one Bitcoin to Bob,

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this transaction is recorded in a block, along with many others.

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Once enough transactions fill up a block,

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it is sealed, meaning no further changes can be made

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to the transactions within it.

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Chain. The linking of blocks in a sequential manner

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creates a chain of blocks.

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Hence the term block chain.

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This chain is integral to understanding block chain's unique qualities.

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Sequential chain formation.

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The block chain is formed by connecting these blocks

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in the exact order they were created.

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This chronological chaining ensures that the entire history of transactions

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is permanently recorded.

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Example, imagine a chain where each link is a block.

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The first block, known as the Genesis block, starts the chain.

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Each subsequent block is connected to the one before it,

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creating a historical record of data or transactions

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that can be traced back to the beginning.

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Decentralization.

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Unlike traditional databases that store all data in a central location,

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blockchain distributes copies of the database across a network of computers.

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This decentralization is a key aspect that enhances the security

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and transparency of the data.

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Distributed ledger technology.

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Unlike centralized traditional databases,

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blockchain is decentralized.

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This means that copies of the blockchain are distributed across a network of computers,

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often referred to as nodes.

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Example, think of blockchain as a book.

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Instead of one copy in a central library,

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thousands of identical copies are spread across a network of libraries, nodes.

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Each time a new block is added, all copies are updated simultaneously.

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Transparency and security.

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Every change in the blockchain is recorded and visible to all participants,

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making it highly transparent.

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The use of cryptographic hashing, consensus mechanisms,

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and decentralization makes the blockchain highly secure against tampering.

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Transparency.

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Every transaction on a blockchain is visible to anyone who has access to the network.

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This transparency ensures that all actions are traceable and accountable.

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Example, in a public blockchain like Bitcoin,

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anyone can view the transaction history of any Bitcoin address.

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This level of openness builds trust among users.

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Security through cryptography and consensus blockchain uses cryptographic techniques to secure data.

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Also, consensus mechanisms like Proof of Work, POW, or Proof of Stake,

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POS ensure that all nodes agree on the state of the blockchain.

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Example, when a new block is added to the Bitcoin blockchain,

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miners use POW to validate transactions and create new blocks.

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This consensus mechanism makes it extremely difficult to alter any information on the blockchain,

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ensuring security and integrity.