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What is blockchain?
Blockchain is a decentralized and cryptographic data register, which stores all transactions on a network. More simply, it is a database that, instead of being on a central server that can be accessed by anyone, is on a global network of computer connected.
1.1 How a blockchain works
Each transaction recorded on blockchain is checked by several computers (called "knots") on the network. After the transaction is validated, it is added to a new block of encrypted and sealed information. This block is then connected to a "chain" already existing by blocks, thus creating a "chain" of transactions.
1.2 Why is Blockchain technology important
By using cryptography, blockchain technology protects transactions from any fraud or cyber attack. Once a transaction has been recorded on blockchain, it can no longer be modified or deleted .
In conclusion, if you wondered "what is blockchain", this is simply a way to store and transfer data decentralized, safe and transparent.
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Bitcoin, the first cryptocurrency created on a blockchain
In recent decades, Bitcoin and Blockchain have completely transformed how we think of money, transactions and technologies. Bitcoin, the first cryptocurrency created on a blockchain, was launched in March 2009 by Satoshi Nakamoto (this is a pseudonym, in reality is not known the real name of the person or of the people who created cryptocurrency). Bitcoin was thought of as a decentralized alternative to traditional money, the main purpose being to eliminate intermediaries from financial transactions.
2.1 Here is some useful information about bitcoin
MINUTION OF THE FIRST BLOCK (Genesis Block):
1. The first block in Bitcoin history, known as Genesis Block , was mined by Satoshi Nakamoto on January 3, 2009 .
2. The first Bitcoin transaction was recorded in this block, which marked the beginning of a revolution in the financial world.
3. Genesis Block is considered the cornerstone of blockchain technology. It has been demonstrated for the first time in history how a decentralized financial system can work.
About bitcoin:
1. Bitcoin uses a blockchain network to record all financial transactions between users.
2. Each transaction is grouped into a block , which is then checked and added to the existing block chain.
3. Miners solve complex mathematical problems, and the first to find the solution receives the right to add the block and is rewarded with Bitcoin (this process is called proof-office).
4. Once confirmed, the transaction becomes permanent (can no longer be changed later) and can be verified by anyone on the network.
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The basic principles of blockchain technology
Blockchain has solved three major problems of digital technology: decentralization, transparency and immutability.
3.1 decentralization - the power of the distributed network
One of the most important aspects of blockchain technology is decentralization . Unlike traditional databases, in the case of a blockchain there is no central server that has absolute control over the data. What is a blockchain we have already seen, we will continue to explain how it works.
How does it work?
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The data is stored simultaneously on all nodes of the network.
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Each knot has a full copy of the block chain.
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Decisions are made by consensus (consensus protocols such as Proof of Work or Proof of Stake).
What are the benefits for users and business?
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Advanced security: Due to the distributed network, a hacker should compromise over 50% of the knots to control a blockchain, which would be extremely difficult.
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Data Privacy: There is no central entity that can use or sell data without your consent.
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Reliability: If one or more knots fall, the network remains operational.
3.2 Transparency - everything is in sight
Another fundamental pillar of blockchain is transparency . Each transaction made on blockchain is publicly registered and can be viewed by anyone.
How is transparency apply?
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Each block contains a list of transactions that can be verified by users.
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Transaction data is accessible to any person through a blockchain explorer.
Advantages of transparency:
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Violation of trust, eliminated: whether we are talking about financial investments or supply chains, any interaction can be audited.
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Increasing consumers' confidence in purchased products: they know exactly what they buy because they have access to the entire product history.
3.3 Imputability - once written, no longer deleted
A basic principle that differentiates a blockchain from other technologies is immutability . Once the information is recorded on a blockchain, they cannot be altered or deleted without leaving traces.
How does it work?
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Each blockchain block is cryptographic tied to the previous one by a unique hash.
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Changing a transaction would require recalculation of hash for all subsequent blocks-an almost impossible process on large networks.
Why is important immutability?
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High Security: The data remain integral and protected against manipulations.
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Keeping a verifiable historian: whether we are talking about financial transactions, medical data or accounting documents, everything is securely archived.
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Responsibility: As all actions are irreversible, blockchain technology eliminates the need for traditional "trust" intermediary.
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Encryption and hashing in blockchain technology
Hashing and encryption are two fundamental concepts in the field of cyber security and software development. If you are a developer or passionate by cyber security, you are probably already familiar with these terms . For those who do not know, but they are interested , we will continue what it means , how they work and what their role is to protect the data.
4.1 encryption
Encryption is the process by which the data is encoded so that it can be read only by the authorized parties that hold the decryption key. Unlike hashing, encryption is a two -way process, ie encrypted data can be recognized and restored in their original form.
In the context of blockchain technology, encryption is the key that protects transactions and shared data. Basically, it secures the information and guarantees that they cannot be accessed, modified or falsified by unauthorized persons.
Why is encryption in a blockchain?
The blockchain is built on the concept of transparency and security , and encryption plays a crucial role in ensuring these two qualities.
Here are some reasons why encryption is particularly important:
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Ensures sensitive data protection
Encryption protects the personal and financial information that circulates through the network, such as details about accounts, transactions or digital identities.
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Ensures the impossibility of falsification
Thanks to the encryption, any change in the data in a block is immediately visible to the rest of the network.
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Ensures data confidentiality
In a blockchain, only those who hold the right key can decrypt information. Therefore, users can enjoy a very high level of privacy.
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Resistance to cyber attacks
Due to the advanced encryption, blockchain is considered one of the safest technological solutions against hackers.
Encrypting Algorithms Use in Blockchain
Among the most commonly used algorithms are:
1. SHA-56 (Secure hash algorithm)
This algorithm is used in most cases, in order to secure transactions by creating unique and irreversible hashs.
2. ECDSA (Elliptic Curve Digital Signature Algorithm)
ECDSA is used for digital signatures and ensures transaction authentication. Important due to high efficiency and security.
3. AES (Advanced Encryption Standard)
AES is used to encrypt and decrypt data stored on blockchain networks. It is popular due to its speed and resistance to attacks.
4. RSA (Rivest-Hamir-Adleman)
RSA is another algorithm commonly used in encryption, especially for private blockchain networks, for safe key shifts.
How does encryption work in blockchain?
At the base, the encryption used in blockchain involves two main processes:
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Data encryption
The data is transformed into a coded format using a cryptographic algorithm, so that only the holders of a "key" can access them.
2. Data decryption
The authorized person uses the key to turn the information back into the original, readable format.
In blockchain, these processes are essential for validating and authorizing transactions. This is where the two fundamental concepts of encryption come into play:
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The public key and the private key
Blockchain systems use two -key encryption - public key (available to everyone) and private key (which must be kept secret).
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Hash functions
Another key element is the hash, used to create a unique "fingerprint". This helps to verify the integrity of information without revealing their content.
4.2 Hashing
Hashing is a way to transform any type of data into a unique series of fixed length characters, called "hash". It is one of the fundamental technologies that underlie the operation of a blockchain and has the role of maintaining the integrity and security of information.
We can imagine hashing as a "digital fingerprint". Each set of data, regardless of size and content, will generate a unique hash. For example, a small text file and a massive database will produce completely different hashs, but both will be the same length.
Why is it important?
Hashingul plays a critical role in blockchain because:
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It retains transparency and integrity: any modification in the initial data leads to a completely different hash, thus preventing data handling.
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Guarantees Security: Hashing helps to encrypt information, protecting them from external attacks.
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Optimizes the verification process: validation and processing of data in blockchain are fast and efficient due to the fixed nature of the hashs.
How does the hashing work?
Hashing uses a mathematical function called "hash function" to transform the entry data. Here's what happens in the general scheme:
1. Entry: Any type of data - from a simple text to files or transactions.
2. Process: Hash function applies an algorithm on data.
3. Result: a unique hash of fixed length is generated.
An important aspect, no matter how long or complex the data set initially is, the resulting hash will always have the same length. Two different data sets should never generate the same hash (Hash collision). This is a basic standard for efficient hashing algorithms.
Example: If you enter the word "password" in a hashing function such as Sha-256, you will get a fixed string, such as `5E84898DA28047151D0E56F8DC6292773603D0AAABBDD41`. If you change a single character at the entrance, the result will be totally different.
Hashing algorithms use in blockchain
In blockchain technology, to encrypt and secure information, several hashing algorithms are used. Here are some of the most common algorithms:
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SHA-256 (Secure hash algorithm): The most recognized algorithm, used in networks such as Bitcoin. It is very safe and generates 256-bit hashs.
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Keccak-256: adopted by Ethereum, offers a secure alternative to SH-256.
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Scrypt: used for cryptocurrencies such as litecoin.
These hash functions are fundamental for carrying out processes such as creating blocks, making transactions and checking them.
Real examples of use of hashing in blockchain
Bitcoin: In the Bitcoin network, the hashing is used to validate transactions and connect the blocks. The SHA-256 ensures the cryptographic binding of each block to the previous block.
Ethereum: The Ethereum network uses hashing to validate smart contracts and processing commercial transactions.
Financial audit: Some companies use hashing to verify the integrity of the supply chains or the correctness of the financial data.
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The future of blockchain technology
Developers continue to work on improving blockchain technology and cryptocurrencies. New virtual currencies are always launched and new network features are introduced to make faster, safer and more efficient transactions. In conclusion, although there are still many challenges that will have to be overcome, Blockchain technology is revolutionary and certainly has the potential to change how we interact with money in the online environment.
