Mini Crypto Program Part 3 || "Understanding of Blockchain", by @mukadas

Hello, I welcome you all to my mini crypto task3 homework post for professor @liasteem. Here I will be discussing with you all you need to know about Blockchain , it’s types and advantages and disadvantages.

What do you know about blockchain?

BLOCKCHAIN

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Blockchain is a database that stores encrypted data blocks and then links them together to form a chronological sequence of data with a single source of truth. Digital assets are distributed, not copied or transmitted, creating an immutable record of assets.

Assets are decentralized and provide full real-time access and transparency for the public. A transparent change catalog maintains the integrity of documents, thereby establishing trust in assets.

The security measures inherent in blockchain and public ledger make it a core technology for almost every industry.

HOW DOES BLOCKCHAIN WORK

You might be wondering how Blockchain works, don’t get confused. I will explain that below.

A blockchain is formed by three important concepts: blocks, nodes and miners.

BLOCKS

All information is carefully stored in a data format and linked to each other. Each subsequent block contains the hash value of the previous block. If the next block contains new information, the hash value will change. However, the previous block retains the old hash value. All of these are meticulously stored, cannot be changed, and have strong data validity.

Each chain consists of several blocks and each block has three elements:

• The block data.

• A 32-bit integer called a nonce. The nonce is produced randomly when a block is been created, which then tend to generates a block header hash.

• The hash is a 256-bit number appended to the nonce. It must start with some number of zeros.

When the first block in the chain is created, a nonce generates a cryptographic hash. The data in the block is considered signed and will always be bound to the nonce and hash unless it is mined

MINER

Miners always have to create new blocks in the chain through a process called mining.
In a blockchain, each block has its own respective nonce and hash, but it also refers the hash of the previous block in the chain. Therefore it is not easy to mine a block, especially those of large large chains.

Miners use specialized software to solve extremely complex mathematical problems, that is, to find random numbers that generate acceptable hashes. Since the random number is only 32 bits, and the hash is 256 bits, it is necessary to mine about 4 billion possible random number hash combinations before finding the correct random number combination. When this happens, miners should have found the "golden random number" and their blocks will be added to the chain.

A change to an earlier block in the chain requires not only the changed block to be saved, but also all subsequent blocks. Because of this, it is extremely difficult to manipulate blockchain technology. Think of it as "knowing mathematics" because finding golden random numbers requires a lot of time and computing power
When a block is successfully mined, all nodes accepts the changes, and the miners receive financial rewards.

NODES

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An important concepts in blockchain technology is decentralization. The chain is not owned by any organization or computer, instead, it is a ledger distributed across nodes connected to the chain.

• A node can be any type of electronic device that manages a copy of the blockchain and makes the network work normally.

• Each individual node has its own special copy of the blockchain, and the network must use algorithms to approve each newly mined block in order to update, trust and verify the chain. Since the blockchain is transparent, it is easy to check and view every operation in the ledger.

• Each participant or user will receive a unique alphanumeric identification number showing their transaction.

Blockchain maintain its integrity and build trust among its users through public informations and also through checks and balance. In essence, blockchain can be thought of as the scalability of trust through technology.

Describe one type of blockchain!

TYPES OF BLOCKCHAIN

Blockchain networks consist of four main types, which include:

1. Public blockchains.
2. Private blockchains.
3. Consortium blockchains
4. Hybrid blockchains.
   Each of the above types of blockchain have their own advantages and disadvantages.

I will like to talk about Private Blockchain.

Private blockchain : A private blockchain is an invitation-only blockchain. The blockchain is managed by a single entity. Access data to protect the confidentiality of certain data.

Therefore, the private blockchain guarantees a higher level of security, privacy and performance. Due to this, private blockchains can be developed for special and specific sectors which include finance institutions and government services. Transactions and data are not public and can only be viewed by participants.

In a restricted environment, a blockchain network that functions similar to a closed network or is controlled by a single entity is a private blockchain. Although it works as a public blockchain network in terms of peer-to-peer connections and decentralization, this type of blockchain is much smaller.

Private blockchains usually run in small networks within companies or organizations, rather than anyone participating in and providing computing power. They are also called permissioned blockchains or enterprise blockchains.

Explain the advantages and disadvantages of the type of blockchain you choose!

ADVANTAGES OF PRIVATE BLOCKCHAIN

• Permissioned Blockchain: The alliance controls the resources and access to the blockchain.

• Increased data protection: Only authorized parties can access transactions on the blockchain.

• Improve scalability: Organizations can add and remove nodes as needed.

DISADVANTAGES OF PRIVATE BLOCKCHAIN

• Centralization -Private blockchains are more centralized because it is usually used by smaller groups such as companies and corporations.

• Security - When it comes to security, private blockchains are more vulnerable to security threats and other vulnerabilities because they have fewer nodes. thus, attackers can gain access quickly.

• Trust Required - Private blockchain requires trust because authorized nodes must be trusted to verify and validate genuine transactions, as opposed to a public blockchain.

Visit Blockchain Demo, and what did you learn from that page? (screenshot required)

Because this homework is all about theory and practicals, we are required to visit Blockchain Demo and explain all all that we have learned from there and the knowledge gained. I will be decribing all i know in details and please of there is an error I will be opened for corrections
After I saw the site and studied it for sometime, this is all I can say
Below is my screenshots to the site.

After tapping on the link Blockchain Demo, this was the initial display of the website.

_{Screenshot from Blockchain Demo}

I then decided to tap on the Hash so I can explore and to know it better.
The Hash first display was empty with Hash number
And as we all know, a valid Hash must always begin with zeros (0). This tells us the empty data is invalid.

_{Screenshot from Blockchain Demo}

I tried filling into the empty data the word Mukadas, and the Hash I got was still invalid.

_{Screenshot from Blockchain Demo}

Each data has a different hash depending on what is been entered.

BLOCKCHAIN
I then tap on Blockchain so as to know it’s Hash too. Below was what was been displayed to me.

_{Screenshot from Blockchain Demo}

We can see there was no data entered but the nonce has a number and the Hash, starting with zeros should tell us the data is valid.

_{Screenshot from Blockchain Demo}

I noticed there were 5 block columns and each is interrelated to the other even though they had on them different nonce.

_{Screenshot from Blockchain Demo}

The prev in each block points backs to the block before it

_{Screenshot from Blockchain Demo}

I typed the name Mukadas in one of the blocks as shown below

_{Screenshot from Blockchain Demo}

Immediately after typing the word Mukadas, the hash changed and all of a sudden became invalid. This is invalid because the hash started with some alphabets and numbers other that zeros but the blocks and nonce wasn’t affected. They remained as they were. Due to the data entered in the first block everything hash in the other blocks became invalid.

_{Screenshot from Blockchain Demo}

To make the hash valid, all you to do is after typing the word Mukadas you tap on Mine.

_{Screenshot from Blockchain Demo}

After the word is entered and mine button is tapped the hash in the block starts with four zeros (0) thereby making all the other blocks valid.

_{Screenshot from Blockchain Demo}

Repeating this action in the other block will make them valid.

_{Screenshot from Blockchain Demo}

Block

I later on then tapped on Block so as to know it’s Hash too and how it works. Below was what was been displayed to me.

_{Screenshot from Blockchain Demo}

We can see from above that there was no data entered but the nonce has a number and the Hash starting with zeros should tell us the Block is signed or valid

Now I typed Mukadas into the data and the hash did not start with zeros. And also the big background turned red. So now I know the block with the information in it is not a valid block.

_{Screenshot from Blockchain Demo}

To make the block valid, that’s where the nonce comes in. The nonce is a number which you can fix to Hash out something with four zeros but that’s going to take us all day. So you just tap on the mine button.

_{Screenshot from Blockchain Demo}

When the mine button is tapped, it runs through all the numbers from 1 all the way up to try and find one where the hash starts with four zeros and this process is called mining.

_{Screenshot from Blockchain Demo}

Explain the advantages and disadvantages of using blockchain technology!

ADVANTAGES OF BLOCKCHAIN

1.TRACEABILITY.

In complex supply chains, it is difficult to trace the origin of products. But, with blockchain, commodity transactions are recorded, so you get an audit trail as to where a particular asset came from. You can also know at each stop the product made during its journey and this level of product traceability can help verify its authenticity and prevent fraud.

2.VERIFIABILITY.

Another aspect of the point mentioned above is verifiability. Since every transaction is logged in the blockchain for its entire duration, an audit trail already exists with which you can view and check the authenticity of your asset.

3.COST REDUCTION

Since blockchain eliminates the need for third parties and intermediaries, it saves companies huge costs. Since you can trust the trading partner, you don't need someone else to set the rules and policies for the exchange. The cost and effort spent on documentation and its revisions are also saved because anyone can view a single, immutable version of the general ledger.

DISADVANTAGE OF BLOCKCHAIN

1.PRIVACY

The data on a public blockchain is encrypted and anonymous, but is in the hands of all nodes on the network, so everyone on the network has legitimate access to this data. There is a possibility that someone could trace the identity of someone on the network through transaction data, which shows that, unfortunately, blockchain is not 100% secure.

2.STORAGE

Since blockchain databases are stored indefinitely on all nodes of the network, the problem of storage arises. As the number of transactions increases, the size of the database will only increase, and there is no way PCs can store unlimited data that is simply added. For comparison: The Ethereum blockchain is growing at a rate of 55 GB / year.

3.REGULATIONS

The regulatory system in the financial sector is a challenge for the implementation of blockchain. Blockchain applications need to define the process of identifying the culprit in fraud incidents, which is a bit challenging. Other regulatory aspects of blockchain technology need to be determined first to promote its widespread adoption.

CONCLUSION

Blockchain is widely used for various purposes. Always record all transactions, time, amount, and date. It is a ledger that records everything, which in turn is responsible for its transparency.
I encourage any blockchain user to read more relevant information before making any transaction. This will help people understand how it works

You might be discouraged by its disadvantage but do not be scared, but as blockchain technology approaches mainstream adoption, these challenges could be resolved over time. Because of its advantages, blockchain developers and enthusiasts will definitely find a way out of these obstacles.

I invite @desiigner, @zology69 and @rubilu123 to this mini crypto assignment.

Thank you for reading my post

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