Blockchain 101
Last updated
Last updated
🌐 Introduction to Blockchain
Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), is a self-replicating, shared, immutable ledger that records digital assets as transactions and tracks the assets based on predefined network rules. An asset can be tangible (land, picture, cash) or intangible (patents, copyrights, NFTs). Almost anything of value can be tracked and transacted on a blockchain network, eliminating the security risks associated with the ease with which data is tampered with.
With its versatile public and private networks, blockchain technology supports many use cases, such as provenance, payment processing, identity verification, and data storage. Central to its design is the shared ledger system, which allows for complete transparency; every transaction and the entire network history are visible to all participants. This system ensures data integrity through its immutable record-keeping and enhances trust among users by safeguarding against unauthorised alterations. The result is a robust infrastructure where secure, reliable transactions occur in a digital realm, reinforcing the assurance of privacy and control within the blockchain's decentralised framework.
🔗 How Blockchain Works
A blockchain operates as a distributed ledger spread across a network of computers, with each node holding an exact copy of the entire ledger. This arrangement maintains data consistency through a consensus protocol, ensuring that the integrity of records is preserved without the need for trust in a central authority. Smart contracts and consensus mechanisms act as the network’s controls, enabling a secure and trustless environment where all participants have confidence in the transaction process.
In contrast to traditional databases that organise data into tables or objects for easy querying and transaction support, a blockchain structures its data into a chain of blocks, each cryptographically linked to the previous one. This approach addresses the double-spending problem unique to digital currency, where a single digital token might be spent more than once. Blockchain technology prevents this by grouping transactions into blocks with a timestamp and broadcasting them across the network. The cryptographic link between blocks ensures that once a transaction is recorded, it cannot be altered, thus maintaining a truthful and tamper-proof record of all transactions within the network.
🌐 Blockchain Types
| Blockchain Types | Description | Examples |
|---|---|---|
Public Permissionless Blockchain
This blockchain network is open to public participation. Anyone can become a node and contribute computing resources while running the consensus algorithm for token rewards or others.
Bitcoin, Ethereum, Solana
Public Permissioned Blockchain
This blockchain allows public access to transaction logs but restricts node participants from running consensus mechanisms. It has a verification and onboarding process for newly joining nodes.
Sovrin Network , Ripple, private Ethereum
Private Permissionless Blockchain
This blockchain network is privately owned and is by invitation only. However, its consensus mechanism is open to the public.
HOLO Chain, LTO Network, Monet
Private Permissioned Blockchain
This blockchain network is purposely built for private and consortium-based only. Both the participation and viewing of the transaction log are through invitation only.
Hyperledger Fabric, Hyperledger Sawtooth