Blockchain for Dummies: A starter's guide to understand the Blockchain Part 3 - The Working of the Blockchain
In the last post on the Blockchain for Dummies: A starter's guide to understand the Blockchain, I spoke about the way data can be stored better, safely and securely in the blockchain in comparison to traditional methods. In this post, I will talk about the question that piqued my interest in learning about the blockchain.
The question was "How does the blockchain work?" - I mean, how did someone mining bitcoin from something that is on the internet made real money?! How can you mine money! - these questions were of extreme curiosity to me. I figured I would mine bitcoin too and make some quick bucks. But, as with everything else in life, it was rarely that simple.
To even try to understand how bitcoin is mined from the blockchain, I first had to learn how the blockchain, at its core, functioned. It took me a while to grasp the concept of the working, but once I found out ways to simplify the science to my level of understanding, it became a lot simpler.
With that, I would start on the 3rd Part in the Blockchain For Dummies series - The Working of the Blockchain.
As I have written in my previous post, the working of the blockchain can be divided into 6 steps.
- Submission of Data
Adding data to the blockchain is simple (as simple as writing a post on Steemit and hitting on the Post button).
- Verification of Data
While adding data to the blockchain is simple, it needs to be verified before it gets added to the network.
The data that is added by you is submitted to the network. The other computers in the network (the so called Nodes) will then verify the data by running algorithms to determine whether the submitted data is legitimate or not, based on previous additions to the blockchain.
The important thing to know is this: For the changes or addition to be deemed as legitimate, over 50% of the nodes must consent. If not, the data is not added to the network.
This is one of the most important features of the blockchain. If a hacker adds illegitimate data, it will still not be added to the chain until the nodes reach consensus. This, the blockchain has a self-verification process.
Consensus on Verification means that 51% of the nodes must agree with the data to be added to the network.
Consistency is required for consensus to be achieved. The data should match the previous entries or the type of entries that the blockchain contains.
- Transaction Verification
This is one of the most important features of the blockchain. When you submit data, it is deemed as a 'transaction'. Verification of this transaction is to ensure that the data to be added is unique and does not contradict something that is already present in the network.
The blockchain can monitor any potential conflicting information. This eliminates the need for 3rd party transaction verification. The network itself can authorize transactions. (Try adding the exact duplicate of a post on Steemit, if you can)
Any and all additions to the blockchain are forever present in the network, providing a tracking mechanism by default.
I understood the above functioning of the blockchain better by applying it to the Steemit market.
- Lets say that I've SBD which I want to convert to Steem. I would go to the Steem Marketplace and place an order to buy Steem for SBD. Let's say I'm sending 200 SBD in return for Steem.
As a first step, the information that I am paying 200SBD is submitted to the network.
If I have 200SBD, the network verifies that I am the owner of the SBD (or maybe it is already taken care of, since I log into Steem marketplace from my account). Then the transaction is determined to be legitimate.
Once the verification is complete, the network will then place the order for the transaction to happen. The amount of SBD is deducted from my account and then transferred to the marketplace.
Even though I have made a transaction and the SBD is deducted from my account, the Steem will not reflect in my account immediately. This is because the order has to be verified.
When the order is verified, the amount of Steem will reflect in my account (in Steemit's case, multiple small amounts of Steem are transferred to my account to complete the eventual order).
That concludes the third part on the Blockchain for Dummies: A Starters guide to understand the blockchain. In the next part, I will write about the difference between blockchain and the bitcoin (most people who are only aware of the terms blockchain and the bitcoin use the two in the same context, but they are anything but the same). And then, we will look at some of the advantages of the blockchain much closely.
Cheers!
If you like my work, please upvote, comment and resteem or share it with your friends. Please follow me @thebatmanbiker.
You can check out the first post in the Blockchain for Dummies series via the links below:
Check out some of my other travel stories and articles from my Steemit blog via the links below:
Experience landing from the cockpit of the world's largest airliner
Solo backpacking trip across the UK - Exploring London
What cartoons did you watch as a kid?
Follow my Steepshot account @lifewithanr3
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I've stumbbled on this post by a chance and like it very much! I will now read your first two parts. I'm totally new to crypto, but I can already tell that blockchain is an invention of 21st Century!
Indeed it is an invention of the 21st century. You could say it is one of "the inventions" of the 21st century. I'm glad you liked the post! Do follow for more. Cheers! :)
I will follow for sure, I'm on lokout for quality contents and yours are definitelly of that sort! Keep up your good work and c u around ;)
Thank you and see you around too! :)
I think your blockchain for dummies series is a must read for all the new comers in the crypto space. Very simple to understand and yet very informative. Most of the noobs boost about trading cryptos but only a few of them are actually aware about the tech i.e. blockchain behind the whole crypto ecosystem. Thanks for bringing this up. 👍
Thanks for the kind words! Happy to know that my understanding is helping some people here :)
Cheers!
I feel like a dummie haha
Then this post is for you, sir! ;)
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