K
Kathleen Martin
Guest
Web3 is one of the biggest buzzwords so far this year, and it is built upon blockchain technology, the same technology that cryptocurrency is based upon. This article will attempt to demystify blockchain technology, explain how it works, discuss tokens and ledgers, and help us gain a deeper understanding of this important technology.
A simple explanation, to begin with, is that a blockchain can be seen as a digital ledger of transactions that is duplicated and distributed across a large network of computers that are part of the blockchain. Each “block” in the blockchain contains a number of transactions, and each time a new transaction occurs, a record of the transaction is added to every participant's blockchain ledger. Because no single entity is in charge of the blockchain, it cannot easily be hacked and the transactions cannot be faked, which keeps it safer from fraud and theft.
The History of Blockchain
Although cryptographer David Chaum first proposed a blockchain-like protocol in his 1982 paper "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups," the first decentralized blockchain was actually conceptualized by a person or group of people known as Satoshi Nakamoto in 2008.
Nakamoto had improved the blockchain design by using a Hashcash-like way of timestamping blocks without requiring the blockchains to be signed by a trusted party. He also introduced a difficulty parameter that stabilizes the rate at which blocks are added to the chain. Nakamoto implemented the design in 2009 as a core component of the Bitcoin cryptocurrency.
By August 2014, the bitcoin blockchain file size, (which includes records of all the transactions that have occurred), was 20 GB. By early 2020, the ledger size had exceeded 200 GB, and as of January 2022, it exceeded 374 GB.
What Is the Blockchain Ledger?
Blockgeeks provide a great description of how the blockchain ledger works. Their analogy makes it easy to understand, “Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.” Every transaction that is recorded on the ledger is stored in what is referred to as a “block,” and each block holds many transactions. The data that is contained in a block is dependent on — and linked to — the data that is in the previous block. Eventually, these blocks form a “chain” of transactions, i.e., a “blockchain.”
Adam Perella, manager of Schellman, a global independent security and privacy compliance assessor, shared this analogy with CMSWire. “If you have an account at a bank, the withdrawals and deposits for that account stay at the bank. Now, what if an account holder decides that their deposits and withdrawals should be known by everyone, so that they cannot be refuted? While it may not be obvious based on the usage of the term, a blockchain is a ledger that is shared among a very large number of nodes that function as a peer-to-peer network,” said Perella. “Because such a large group shares and maintains the same ledger, it is difficult to argue the amount of money each account holder has, and each transaction performed.”
Continue reading: https://www.cmswire.com/information-management/understanding-web3s-supporting-blockchain-technology/
A simple explanation, to begin with, is that a blockchain can be seen as a digital ledger of transactions that is duplicated and distributed across a large network of computers that are part of the blockchain. Each “block” in the blockchain contains a number of transactions, and each time a new transaction occurs, a record of the transaction is added to every participant's blockchain ledger. Because no single entity is in charge of the blockchain, it cannot easily be hacked and the transactions cannot be faked, which keeps it safer from fraud and theft.
The History of Blockchain
Although cryptographer David Chaum first proposed a blockchain-like protocol in his 1982 paper "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups," the first decentralized blockchain was actually conceptualized by a person or group of people known as Satoshi Nakamoto in 2008.
Nakamoto had improved the blockchain design by using a Hashcash-like way of timestamping blocks without requiring the blockchains to be signed by a trusted party. He also introduced a difficulty parameter that stabilizes the rate at which blocks are added to the chain. Nakamoto implemented the design in 2009 as a core component of the Bitcoin cryptocurrency.
By August 2014, the bitcoin blockchain file size, (which includes records of all the transactions that have occurred), was 20 GB. By early 2020, the ledger size had exceeded 200 GB, and as of January 2022, it exceeded 374 GB.
What Is the Blockchain Ledger?
Blockgeeks provide a great description of how the blockchain ledger works. Their analogy makes it easy to understand, “Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.” Every transaction that is recorded on the ledger is stored in what is referred to as a “block,” and each block holds many transactions. The data that is contained in a block is dependent on — and linked to — the data that is in the previous block. Eventually, these blocks form a “chain” of transactions, i.e., a “blockchain.”
Adam Perella, manager of Schellman, a global independent security and privacy compliance assessor, shared this analogy with CMSWire. “If you have an account at a bank, the withdrawals and deposits for that account stay at the bank. Now, what if an account holder decides that their deposits and withdrawals should be known by everyone, so that they cannot be refuted? While it may not be obvious based on the usage of the term, a blockchain is a ledger that is shared among a very large number of nodes that function as a peer-to-peer network,” said Perella. “Because such a large group shares and maintains the same ledger, it is difficult to argue the amount of money each account holder has, and each transaction performed.”
Continue reading: https://www.cmswire.com/information-management/understanding-web3s-supporting-blockchain-technology/
