Blockchain basics

Agenda:

Kacper Hernacki

— 2 min read
Blockchain basics

Agenda:

  • What is a blockchain?
  • Blockchain properties
  • How it is built?
  • Blocks mining
  • Hash
  • Consensus
  • Generations of blockchain
  • Layers of blockchain

Blockchain is the latest technology which is the fundamental of the cryptocurrencies.

In the simplest words, it is the digital storage which is fully decentralized through nodes. It is built with blocks, which consist informations and hash. Each block is connected with previous one, by hashes.

Blockchain properties:

  • Decentralization,
  • Consistency,
  • Scalability.

Block

Block structure is defined by data it includes. They are mainly the same through different ecosystem. Let’s see what bitcoin block should stores:

  • Magic number,
  • Block size,
  • Block header,
  • Transactions counter,
  • Transactions.

Blocks mining

Mining is the process of approving the transaction, pushing it into storage and rewarding miners. There are two basic consensus mechanisms of adding new blocks.

  • Proof of work,
  • Proof of stake.

POW vs POS

POW is based on the race between “miners”of solving computational problem.

POS requires to pledge a “stake” of digital currency before validating transactions.

Hash

The hash of the block is mainly formed by six elements:

  • the version of the number of block,
  • Hash of the previous block,
  • Timestamp,
  • Code generated from transactions,
  • The difficulty of mining,
  • Random string, called nonce.

Generations of Bloclchain technologies

Blockchain 1.0 — decentralization of money. and transfers

Blockchain 2.0 — decentralization of markets, dapps, DAO, DAC

Blockchain 3.0 — decentralization of different industries like healthcare, government, international trades

To better understand blockchain, it is usually divided into 6 layers:

  • Application layer,
  • Modeling layer,
  • Contract layer,
  • System layer,
  • Data layer,
  • Network layer.

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