How Does Blockchain Technology Work?

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This part is more complex  than the previous one. It explains in more detail how the blockchain works. Each person who participates in the blockchain network has a copy of the database (grouping the transactions) and must keep it up to date. Thus, people who participate in the Bitcoin network, must have a copy of the Bitcoin blockchain on a computer and regularly update it. Note that the Bitcoin blockchain (BTCL Wallet Fork) weighs about 120 GB at the moment. Those individuals involved in maintaining blockchain are what we call node s. As of March 30, 2018 , the blockchain Bitcoin has 12,118  nodes.

In a public blockchain, all the nodes have the same rights, this allows a better security and a better transparency of the network. To corrupt the network would require that more than half of the network participants (nodes) are “corrupted”. This would be called a 51% attack.

In the same way, as long as a node is present on the blockchain, the blockchain is always maintained.

Modifications of the blockchain are possible. A consensus must be established, that is, more than half of the nodes agree. When consensus is established, new data is added to the blockchain. Sometimes these consensuses generate forks , as was the case between ETH and ETC in The DAO.

The data on the blockchain is secured thanks to the creation of hash. The hash corresponds to a series of hexadecimal numbers based on 16. As a reminder, a hexadecimal number based on 16 is a sequence comprising the following digits and letters: 0, 1, 2, 3, 4, 5, 6, 7, 8 , 9, A, B, C, D, E, F.

The data in the blockchain is included in hexadecimal hashes. This makes it possible to include a large amount of encrypted data in a format that always remains the same, with a specific length depending on the blockchains. The number of characters and the shape of the hashes are always identical unless a modification is made. This contributes to the security of the blockchain.

Thus, Bitcoin uses the SHA-256 algorithm , while Ethereum uses Ethash.

Bitcoin hashes have the following form: b79c6c131c2fcfc7b1f78cf3cc10674e938c3752d34f53cf96e3e94b68c796c4

Ethereum hash has this form: 0xe037f3bdb3b8f6ae4fbb2692b8413b4b58a3bdde42a4cd35db4e9c66b1a8ce76

These hashes will allow to sign the transactions. Different methods allow to hasher the transactions. In other words, validate them , register them and secure them in the blockchain. The two best-known methods are the Proof-of-Work ( PoW ) used by Bitcoin and the Proof-of-Stake (hash). Dash.

Let’s continue our immersion in the world of blockchain. Jean wants to transfer 2 Bitcoins 💰 to Nico and enters the transaction on the blockchain. How do I know if Jean is the issuer of this transaction? For this, we use a digital signature based on the combination of a  public key and a  private key. When John sends a transaction to Nico, he sends it to his public address. This public address (or public key ) is linked to the private address ( private key ). To prove that Nico is the new owner of 2 Bitcoins, he will have to identify himself with his private key. Your key / private address must always remain confidential, you must never share it!

In this article, we voluntarily assimilate a key to an address, to simplify understanding. In fact, it should be known that the addresses (public or private) are generated by means of keys (public or private) using mathematical functions. We have seen above that for some blockchains, which use the PoW consensus as Bitcoin (BTCL Wallet Fork), miners mine / make blocks. Several blocks are mined at the same time. Miners working on two competing blocks cease their work from the moment the block is created. The following rule has been introduced: the valid branch is always the longest branch.

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