It is my pleasure to participate in this week steemit crypto academy Advance class by @stream4u. This lecture has really opened my eyes to some of the hidden facts about blockchain and hash generation. Below is my attempt on the homework.
- What is Blockchain and What are the types of Blockchains / Explain in detail the types of Blockchain?
Blockchain technology is a network of peer-to-peer nodes that maintains public transactional records, also known as blocks, in various databases, also known as the "chain." A ‘digital ledger' is a common term for this type of storage.
Every transaction in this ledger is authenticated and protected against tampering by the owner's digital signature. As a result, the data contained in the digital ledger is extremely safe.
To put it another way, the digital ledger is similar to a Google spreadsheet that is shared across multiple computers in a network and stores operational records based on actual purchases. The intriguing aspect is that everyone can view the data, but they cannot alter it.
Blockchain is a technologically advanced digital ledger that has recently received a lot of attention and traction. But, why has it gained such a large following? Let's take a closer look to understand what's going on.
Data and transaction records are an important aspect of any company's operations. This information is frequently managed in-house or sent through a third party, such as brokers, bankers, or lawyers, which adds time, expense, or both to the company. Fortunately, Blockchain eliminates this time-consuming procedure by allowing transactions to flow more quickly, saving both time and money.
The majority of people believe that Blockchain and Bitcoin are interchangeable terms, but this is not the case. Blockchain is a technology designed to support a wide range of applications in a variety of industries, including financing, supply chain, production, and so on, but Bitcoin is a money that is secure thanks to Blockchain technology.
How does Blockchain works?
Individual transactions and blocks are the two types of records that make up a blockchain ledger. The first block contains a header and details about transactions that occurred within a specific time frame. The timestamp of the block is used to construct a hash, which is an alphanumeric string.
Following the creation of the initial block, each successive block in the ledger calculates its own hash using the prior block's hash.
A computational method known as validation or consensus must be used to verify the legitimacy of a new block before it can be added to the chain. A majority of nodes in the network must agree that the new block's hash has been calculated correctly at this point in the blockchain process. Consensus ensures that all copies of the distributed ledger blockchain are in the same state.
A block can be referenced in succeeding blocks, but it cannot be altered after it has been introduced.
When a block is swapped out, the hashes for preceding and future blocks are likewise changed, causing the shared state of the ledger to be disrupted.
Other Applications of Blockchain
Blockchain technology has the potential to provide efficiencies that go well beyond digital currency. While public blockchain networks are used for cryptocurrencies like bitcoin, private blockchain networks can be used for a variety of corporate applications:
Blockchain supply chain: Companies such as IBM Blockchain are now utilizing blockchain technology to provide private network systems that track product supply chains more accurately.
What are the types of blockchain?
There are four types of blockchain based on my research on the topic.
A public blockchain is the first type of blockchain technology. This is where Bitcoin and other cryptocurrencies got their start, and where distributed ledger technology gained traction (DLT). It eliminates the drawbacks of centralization, such as decreased security and transparency. Information is distributed across a peer-to-peer network rather than being stored in a single location. Because of its decentralized nature, it necessitates some method of data verification. This is a consensus mechanism that allows blockchain participants to agree on the present state of the ledger. The two most frequent consensus approaches are proof of work (PoW) and proof of stake (PoS).
Anyone with internet connectivity can join on to a blockchain platform and become an authorized node, making public blockchain non-restrictive and permissionless. This user has access to current and historical records, as well as the ability to perform mining operations, which are sophisticated calculations required to verify transactions and add them to the ledger. On the network, no valid record or transaction may be modified, and because the source code is usually open source, anybody can verify the transactions, uncover errors, and offer fixes.
Bitcoin (BTC) and Ethereum (ETH) are the most well-known public blockchain examples. Both of these coins are built using open source computational codes that anybody can see and use.
The term "private blockchain" refers to a blockchain that is only accessible to those who have been invited. A single entity manages the blockchain. Permission to read, write, and audit the blockchain is required for all participants. To keep particular types of data private, the blockchain might contain numerous tiers of data access. As a result, private blockchains provide better security, privacy, and performance. Private blockchains can be tailored to certain industries like financial and government services because to their private nature. The transactions and data are not available to the general public and are only accessible to the people involved.
Access to private blockchains is limited. The system administrator must approve anyone who want to join. They're usually centralized and administered by a single entity. Hyperledger, for example, is a private blockchain with limited access.
Examples of companies that uses private blochain:
A lot of companies have adopted the private blochain technology, among which are: FedEx, KIK, IBM, Walmart etc.
- FedEx is one of the largest logistical corporations in the world, handling billions of dollars in freight each year. FedEx has become the first major transportation company to use Blockchain systems to handle its supply chain.
Advantages of Private Blockchain
The consortium controls the resources and access to the blockchain through a permissioned blockchain.
Improved privacy: Only permissioned parties have access to the transactions on the blockchain.
A hybrid blockchain is a form of chain that includes aspects of both private and public blockchains. It allows businesses to build up a private, permission-based system alongside a public, permissionless system, letting them to regulate who has access to certain data recorded on the network and what data is made publicly available.
In a hybrid blockchain, transactions and records are typically not made public, but they can be validated if necessary, such as by granting access via a smart contract.
Inside the network, confidential information is kept, but it may still be verified. Even if a private entity owns the hybrid blockchain, it is unable to make changes to transactions.
A user who accesses a hybrid blockchain has complete network access. Only when a transaction is made, the user's identity is kept hidden from other users. After that, the other party learns of their identities.
ITS USE CASES:
Real estate is only one of the many applications for hybrid blockchain. Companies can utilize a hybrid blockchain to run their systems securely while displaying certain information to the public, such as listings. Hybrid blockchain can help retailers streamline their procedures, and it can also help highly regulated industries like finance.
Benefit of Hybrid Blockchain
Because hybrid blockchain operates in a closed ecosystem, outside hackers are unable to launch a 51 percent attack on the network. It also safeguards privacy while allowing third-party contact. It has better scalability than a public blockchain network, and transactions are inexpensive and quick.
In the same way that a hybrid blockchain contains private and public blockchain elements, a consortium blockchain, also known as a federated blockchain, has. However, it differs in that it involves various organizational members working together on a decentralized network. In essence, a consortium blockchain is a private blockchain with restricted access to a specific group, removing the hazards associated with a private blockchain controlled by a single organization.
Consensus methods are regulated by preset nodes in a consortium blockchain. It has a validator node, which is responsible for initiating, receiving, and validating transactions. Transactions can be received or initiated by member nodes.
THE USE CASE OF CONSORTIUM
This sort of blockchain has applications in banking and payments. Different banks can join forces to establish a consortium, with the consortium determining which nodes will validate transactions.
Benefit of using Consortium Blockchain:
In comparison to a public blockchain network, a consortium blockchain is more secure, scalable, and efficient. It also has access controls, just like private and hybrid blockchains.
Question 2: What are the benefits of blockchain?
Here are some of the benefits user derived from using blockchain technology:
TRUST is a notion that has a lot of meaning in the world of international trade. Lawyers were previously employed to repair the trust gap between two parties, but this took additional time and money. Cryptocurrency, on the other hand, has completely altered the trust equation. Many organizations are based in locations with limited resources and high levels of corruption. In such circumstances, Blockchain provides a major benefit to the individuals and organizations impacted, allowing them to avoid the traps set by untrustworthy third-party middlemen.
Blockchain can be used for the purposes of keeping sensitive patient data, blockchain technology can be employed as a secure platform in the healthcare industry. With the technology, health-related companies can construct a centralized database and exchange data with only the people who need to know.
Financial services such as digital wallets have benefited many people thanks to blockchain. It has given microloans and enabled micropayments to people in less-than-ideal financial situations, bringing new vitality to the global economy.
EXPLAIN BLOCKCHAIN DISTRIBUTED LEDGER.
DLT is a digital method for documenting asset transactions in which the transactions and their information are stored in several locations at the same time. Distributed ledgers, unlike traditional databases, lack a central data repository and administrative system.
Each node in a distributed ledger processes and validates each item, resulting in a record of each item and consensus on its authenticity. Static data, such as a registry, and dynamic data, such as financial transactions, can both be recorded using a distributed ledger.
By transferring record-keeping from a single, authoritative place to a decentralized system in which any relevant entities can read and amend the ledger, this architecture marks a substantial change in how information is received and shared. As a result, all other entities are able to see who is accessing and altering the ledger. DLT's transparency instills a high level of confidence among participants and almost eliminates the possibility of fraudulent activity in the ledger.
There are several different forms of distributed ledger technology in use right now.
The most well-known version of DLT is blockchain, which groups transactions into blocks and then broadcasts them to network nodes. Bitcoin and other cryptocurrencies are powered by it.
Another version of DLT is Tangle, which is designed for Internet of Things (IoT) ecosystems. Tangle is designed to support trustworthy data and value transmission between humans and machines is a permissionless, feeless, scalable distributed ledger, " according to the Eclipse Foundation and the IOTA Foundation, who formed the Tangle EE Working Group.
Corda, Ethereum, and Hyperledger Fabric are other three well-known distributed ledger technologies.
Question 4: What Is Blockchain Double Spending and how Bitcoin handles this problem?
Double-spending is the act of making two payments in the same currency or with the same cash in order to deceive the recipient of those funds. This is simply not practicable with tangible currency. A $20 bill or a silver coin cannot be given to two people. Most internet payments rely on a third party to ensure that funds are correctly transmitted and received. The transactions are validated by banks, credit card issuers, and payment processors themselves, reducing the danger of double-spending. There is no third-party mediator with cryptocurrency; instead, the sender and receiver are the only ones involved.
The Bitcoin blockchain adopts the use of public ledger where miners receiving mining awards to protect the blockchain. This is a public service. It is an unconfirmed or outgoing transaction that is waiting for a block to contain if you make a transaction initially. Around every 10 minutes, new blocks are added to the Bitcoin blockchain.
When a non-confirmed transaction is included in the block, it is now a "confirmed" transaction. It is written to the blockchain public record. The recipient is allotted a confirmed transaction and authenticated by the system through specific cryptographic evidence, which means that it cannot be duplicated or "copied." The transaction is not permitted by anybody; you only need a cryptocurrency wallet and an internet connection.
There is a significant incentive to double-spend bitcoin with a market cap of almost $783,038,007,166 as at the time of writing this post. Double spending would cause major damage to the network and lose one of the main features: untrustworthy, unchanging and decentralized transactions. Double-spend confirmed transactions are almost impossible thanks to the sturdy design of Bitcoin.
Question 5: Practical + Theory, Visit Blockchain Demo and check section Blockchain, then explain in detail how Blocks Hashes Work in Blockchain, what will happen when any middle of the block gets changed, try to give screenshot for each possible details.
The block assembles in chronological order, as shown in the photographs above. A block number field, data field, nonce field, hash value field, and preceding field can all be found in this section. Block one is followed by block two, block three, block four, and so on. The hash value field from the preceding block corresponds to the previous field.
Every block in a blockchain is cryptographically linked to the following block, as we well know. Because block one does not have a previous hash value, the previous field in block one is 0 in the above example. The prior field in block number two contains a hash value that refers to the previous block's hash value. Until the last block, this process will continue.
what will happen when any middle of the block gets changed, try to give screenshot for each possible details.
When data is changed in any block, let's say we have changed the number in block 3 when we add the word "block" to the data as shown below, the data in block 3 now differs and a new signature will be received in the mining block. This new data set no longer covers other blocks with the signature chain. Block number 3 is broken, because the hash is no longer valid and every single block that follows to the end of the chain will be invalidated. It shows that some data in block 3 has been changed to other users of this blockchain and because the blockchain should be unchanging, they reject it by trying to shift back to a previous blockchain log, in which all blocks are still chained together.
The change in block 3 data has caused a change in hash for block 3 and 4 as shown below.
The changes in block 3 for before and after the alteration is a s follows:
Old nonce 12937
New nonce after the change: 36317
New hash: 00004e62ae64533ec0a01464aa62f04d68a3294e9bc4fa4fd2ae98c178b31756
The changes in block 4 for before and after the alteration is a s follows:
Old Nonce: 35990
New Nonce: 35990
Old hash: 0000ae8bbc96cf89c68be6e10a865cc47c6c48a9ebec3c6cad729646cefaef83
QUESTION 6: WHAT IS VECTOR76 ATTACK IN BLOCKCHAIN?
A malevolent miner constructs two nodes in this situation, one connected to only the exchange node and another to well-connected peers in the blockchain system. The miner then generates two transactions, one with a high value and the other with a low value. The attacker then pre-mines and withholds from an exchange service a block containing a high-value transaction. The attacker swiftly delivers the premined block to the exchange service after receiving a block notification. It, along with a few other miners, will treat the premined block as the main chain and verify this operation.
As a result, this attack takes advantage of the fact that one side of the network detects the transaction the attacker has inserted in a block while the other side does not.
The attacker transmits a low-value transaction to the main network after the exchange service approves the high-value transaction, which is eventually rejected. Therefore, the amount of the high-value transaction is credited to the attacker's account. Though this form of attack has a high possibility of succeeding, it's not widespread because it requires a hosted e-wallet that takes payments after one confirmation and a node that receives incoming transactions.
QUESTION 7: LIMITATIONS/DISADVANTAGES OF BLOCKCHAIN.
The following are the limitations and demerits of blockchain:
Use of a lot of energy: Blockchain's distributed nature necessitates constant processing power in numerous locations, resulting in global electricity consumption
The regulatory position is still unclear. The unresolved regulatory status of Blockchain has hampered its widespread adoption. The implementation of this new technology would undoubtedly disrupt centralized organizations and bureaucracy, such as banks, government agencies, and other parties involved in transaction processing, and these will undoubtedly fight it.
It can possibly be hacked, according to some. This would only be achievable if 51 percent of chain users consented to commit fraud and modified transaction data at the same time. That is essentially unachievable in light of current technical advancement.
Large volumes of data cannot be stored on the blockchain. However, as technology advances, this disadvantage may be eliminated in the future.
QUESTION 8: Conclusion(Overall understanding of Blockchain.).
Blockchain is a growing chain of blocks that are linked and secured using cryptographic processes. A set of procedures and consensus from all network participants are followed when new blocks are validated. Records are kept in a sequential order. The block representation in blockchain is done via pointers and linked list data structures. Using a linked list, the blocks are sorted in a sequential order and aligned up. The location of the next block is indicated via pointers. The safe hash method generates a block, which is a collection of data that holds transaction details such as timestamps and links to previous blocks.
Blockchain is likely to become the benchmark for transactions in the future, particularly in international finance. It is also intended to boost business processes by not just storing data but also enhancing operations by securely transferring data to appropriate regions for better optimization.
Governments all across the world are experimenting with blockchain technology. The implementation of blockchain can ensure that voting takes place in a timely and efficient manner. The major concern is voter information, which is safeguarded by the high level of security provided by blockchain. The institutions in charge of the electoral process can improve it.