What is Blockchain Technology? Cryptographic Hashing Explained

Blockchain is a method for recording data in a manner that makes it hard or impossible to alter the system, hack or cheat the system.

Blockchains are essentially the digital record of transactions, which is replicated and distributed throughout the computer system network that are based on the blockchain. Every block has a set of transactions. Every when a new transaction takes place on the blockchain there is a record of the transaction is added to each participant’s ledger. The decentralized database that is managed by multiple users is referred to by the name of Distributed Ledger Technology (DLT).

Blockchain is a form of DLT that allows transactions are recorded using an invariable signature cryptographic, also known as hash.

The Basics of Distributed Ledger Technology (DLT) Blockchain explained

If one block of a chain was altered, it would be obvious that the change was a result of manipulation. If hackers were to attempt to hack the blockchain system, they would need to alter every block of the chain, in all distributed versions that make up the chain.

Blockchains like Bitcoin or Ethereum are always and continuously expanding as more blocks are included in the chain which increases your security.

Why is there such a lot of excitement about blockchain technology?

blockchain technology explained

There have been numerous attempts to create digital currency before, and they’ve been unsuccessful in every instance.

The most prevalent problem is trust. If someone is able to create a new currency, referred to as”the X dollar, then how do we be sure that they won’t make themselves one million X dollars, or even steal your X dollars to make their own?

Bitcoin was created to address this issue by making use of a particular type of database , known as blockchain. The majority of databases, for instance, the SQL database have a person responsible for the database, who is able to change the entry (e.g. making themselves a million dollars). Blockchain is unique because no one is in charge, it’s controlled by the users who make use of it. Additionally, bitcoins aren’t able to be stolen, faked, or spent twice – which means that those who own it can be sure that it is of some worth.

How is blockchain data stored and protected

Blockchain works by incorporating the identifier from the previous block to the identifier of the next block, creating an immutable, unbreakable chain. However, as more blocks are added what is the best way to keep the data in control?

The most effective way to keep blockchain data manageable and secure is via an algorithm known as hashing that works and the consolidating structure of data called Merkle Tree.

What exactly is hashing?

If a transaction is confirmed and requires to be placed in the block of the chain, it will be placed through an algorithm that converts it into unique characters and numbers, which is similar to those that could be generated by the random password generator. The two hashes of the transaction will be combined and then run through the algorithm for hashing to create a unique hash. The process of combining several transactions into new hashes is repeated until there is only one hash, the ‘root hash’ that is the result of multiple transactions.

What makes hashes distinct and a major security characteristic of blockchains is that they operate in only in one direction. Even though the same data will always generate exactly the same number of letters and numbers but it is not possible to un-hash as well as reverse this process by using the letters and numbers to identify the original data.

What is an Merkle Tree?

If the hashing procedure is repeated in exact same transaction, the identical hashes will be generated. This allows anyone who uses the blockchain to confirm whether the data hasn’t been altered in any way, as any change to any aspect of the data results in an entirely different hash, which will affect every subsequent iteration of hashes up to the root. This is referred to as Merkle Tree.

Merkle Trees serve the purpose of drastically decreasing the amount of data needed to be stored, broadcast via the network by combining groups of transactions that have been hashed into one root hash. When each transaction is washed, and then added and again hashed to create ultimately, the root is be of a standard size.