Blockchain and a hash situated in the header. The

Blockchain
tecnhnology: How does it work?

 

Blockchain
components

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The basic components of
the blockchain are:

–         
The nodes which are the partecipants of
the blockchain and are physically their servers.

–         
The transactions which are the data that
needs to be exchanged, verified, approved and registered

–         
The block which represents a certain
number of transactions

–         
Ledger where the transactions are
registred with transparency in a chronological order. It is composed by the
blockes related thanks to the hash function

–         
Hash that is essentialy a digital
fingerprint of some data and identifies in a unique way each block

Each block contains
different transactions and a hash situated in the header. The hash contains all
the information relative to the block and a hash with the information of the
previous block which allows to create a chain and keep the blocks together.

The transaction contains information on the recipient’s
public address, the characteristics of the transaction and the cryptographic
signature that guarantees the security and authenticity of the transaction.

 

Transactions are placed
into groups called blocks and the blocks are linked through what is called
Blockchain.

The transactions in one
block are considered to have happened at the same time. These blocks
are linked to each-other (like a chain) in a proper linear, chronological order
with every
block containing the hash of the previous block.

How
does it work?

The problem consists in
the fact that any node in the network can collect unconfirmed
transactions and create a block and then broadcasts it to rest of the network
as a suggestion
as to which block should be the next one in the blockchain.

The solution arrives
with the introduction of a mathematical puzzle: each block will be
accepted in the blockchain provided if it contains an answer to a very special
mathematical
problem.

The Blockchain validation process involves a verification
and approval phase based on calculation resources that are made available by
the Blockchain participants and which are aimed at solving complex problems or
cryptographic puzzles and which allow to have a Distributed Consent and no more
than a consent based on a third party intermediary or a centralized institution
or institution. Those who participate in the resolution of the problem and who
therefore contribute to the validation of the process and the transaction are
called Miner and their intervention, which needs to be carried out with
important resources, is remunerated through the issuance of a virtual currency
or cryptocurrency.

 

The logic that underlies this process starts from the
assumption that in order to avoid fraud risks, in particular by a
“node” of the Blockchain, it is necessary to create obstacles and
complications on the whole validation process. Specifically, each node that
intends to participate in validation must also solve a complex problem in the
form of a cryptographic puzzle. The puzzle is designed to compete all the nodes
and all contribute to the resolution by making available its computing power.
The node that will be able to solve the cryptographic puzzle will have the
right to validate the block with the presentation of the Proof of Work which is
also the proof of the solution of the puzzle. For this commitment and for this
result the node is remunerated with a Unit of value that depends on the type of
Blockchain.

 

The node generating a
block needs to prove that it has put enough computing resources to solve a
mathematical puzzle. For example, a node can be required to find a “nonce”
which when hashed with transactions and hash of previous
block produces a hash with certain number of leading zeros. The average effort
required is
exponential in the number of zero bits required but verification process is
very simple and
can be done by executing a single hash.

First node, to solve
the problem, broadcasts the block to rest of the network.

The nodes donating
their computing resources to solve the puzzle and generate block are called
“miner nodes” and are financially awarded for their efforts.

The nodes are not “public”, that is, they do
not know each other and the Proof of Work also represents the way to build a
relationship of “trust” based on the concrete collaboration to the
solution of the tests that must be validated.

The network only
accepts the longest blockchain as the valid one. Hence, it is next to
impossible for an attacker to introduce a fraudulent transaction since it has
not only to
generate a block by solving a mathematical puzzle but it has to at the same
time
mathematically race against the good nodes to generate all subsequent blocks in
order for it
make other nodes accept its transaction and block as the valid one. This job
becomes even
more difficult since blocks in the blockchain are linked cryptographically together.