Blockchain Technology

What Is Blockchain Technology?

Blockchain is a method of recording information that makes it impossible or difficult for the
system to be changed, hacked, or manipulated. A blockchain is a distributed ledger that
duplicates and distributes transactions across the network of computers participating in the
blockchain.

Blockchain technology is a structure that stores transactional records, also known as the
block, of the public in several databases, known as the “chain,” in a network connected
through peer-to-peer nodes. Typically, this storage is referred to as a ‘digital ledger.’

Every transaction in this ledger is authorized by the digital signature of the owner, which
authenticates the transaction and safeguards it from tampering. Hence, the information the
digital ledger contains is highly secure.

In simpler words, the digital ledger is like a Google spreadsheet shared among numerous
computers in a network, in which, the transactional records are stored based on actual
purchases. The fascinating angle is that anybody can see the data, but they can’t corrupt it.

Dive into the transformative world of blockchain technology with our intensive Cyber
security Bootcamp. Uncover the revolutionary potential of blockchain while honing your
skills in safeguarding these decentralized systems. From understanding the intricacies of
smart contracts to fortifying digital transactions, this bootcamp equips you to navigate the
evolving landscape of cybersecurity within the blockchain domain. Don't miss this
opportunity to become a proficient cybersecurity professional in the realm of blockchain.

Why is Blockchain Popular?

Suppose you are transferring money to your family or friends from your bank account. You
would log in to online banking and transfer the amount to the other person using their account
number. When the transaction is done, your bank updates the transaction records. It seems
simple enough, right? There is a potential issue which most of us neglect.

These types of transactions can be tampered with very quickly. People who are familiar with
this truth are often wary of using these types of transactions, hence the evolution of third-
party payment applications in recent years. But this vulnerability is essentially why
Blockchain technology was created.

Technologically, Blockchain is a digital ledger that is gaining a lot of attention and traction
recently. But why has it become so popular? Well, let’s dig into it to fathom the whole
concept.

Record keeping of data and transactions are a crucial part of the business. Often, this
information is handled in house or passed through a third party like brokers, bankers, or
lawyers increasing time, cost, or both on the business. Fortunately, Blockchain avoids this
long process and facilitates the faster movement of the transaction, thereby saving both time
and money.

Most people assume Blockchain and Bitcoin can be used interchangeably, but in reality,
that’s not the case. Blockchain is the technology capable of supporting various applications
related to multiple industries like finance, supply chain, manufacturing, etc., but Bitcoin is a
currency that relies on Blockchain technology to be secure.

Blockchain is an emerging technology with many advantages in an increasingly digital world:

 Highly Secure

It uses a digital signature feature to conduct fraud-free transactions making it

impossible to corrupt or change the data of an individual by the other users without
a specific digital signature.

 Decentralized System
 Conventionally, you need the approval of regulatory authorities like a government
or bank for transactions; however, with Blockchain, transactions are done with the
mutual consensus of users resulting in smoother, safer, and faster transactions.

 Automation Capability

It is programmable and can generate systematic actions, events, and payments

automatically when the criteria of the trigger are met.

Structure and Design of Blockchain

A blockchain is a distributed, immutable, and decentralized ledger at its core that consists of
a chain of blocks and each block contains a set of data. The blocks are linked together using
cryptographic techniques and form a chronological chain of information. The structure of a
blockchain is designed to ensure the security of data through its consensus mechanism which
has a network of nodes that agree on the validity of transactions before adding them to the
blockchain.

Blocks:

A block in a blockchain is a combination of three main components:

1. The header contains metadata such as a timestamp which has a random number used in the
mining process and the previous block's hash.

2. The data section contains the main and actual information like transactions and smart
contracts which are stored in the block.

3. Lastly, the hash is a unique cryptographic value that works as a representative of the entire
block which is used for verification purposes.

Block Time:
Block time refers to the time taken to generate a new block in a blockchain. Different
blockchains have different block times, which can vary from a few seconds to minutes or
may be in hours too. Shorter block times can give faster transaction confirmations but the
result has higher chances of conflicts but the longer block times may increase the timing for
transaction confirmations but reduce the chances of conflicts.

Hard Forks:

A hard fork in a blockchain refers to a permanent divergence in the blockchain's history that
results in two separate chains. It can happen due to a fundamental change in the protocol of a
blockchain and all nodes do not agree on the update. Hard forks can create new
cryptocurrencies or the splitting of existing ones and It requires consensus among the
network participants to resolve.

Decentralization:

Decentralization is the key feature of blockchain technology. In a decentralized blockchain,

there is no single central authority that can control the network. In decentralization,the
decision-making power is distributed among a network of nodes that collectively validate and
agree on the transactions to be added to the blockchain. This decentralized nature of
blockchain technology helps to promote transparency, trust, and security. It also reduces the
risk to rely on a single point of failure and minimizes the risks of data manipulation.

Finality:

Finality refers to the irreversible confirmation of transactions in a blockchain. If and when a

transaction is added to a block and the block is confirmed by the network, it becomes
immutable and cannot be reversed. This feature ensures the integrity of the data and prevents
double spending, providing a high level of security and trust in Blockchain Types &
Sustainability

Openness:
Openness in blockchain technology makes the blockchain accessible to anyone who intends
to participate in the network. This implies that it is open for all and anyone can join the
network, validate transactions, and can add new blocks to the blockchain, so long as they
know the consensus rules. Openness promotes inclusivity, transparency, and innovation, as it
allows for participation from various stakeholders.

Public Blockchain:

It is a kind of blockchain which is open for the public and allows everyone to join the
network to perform transactions and to participate in the consensus process. Public
blockchains are transparent, because all transactions are publicly recorded.

How Does Blockchain Technology Work?

In recent years, you may have noticed many businesses around the world integrating
Blockchain technology. But how exactly does Blockchain technology work? Is this a
significant change or a simple addition? The advancements of Blockchain are still young and
have the potential to be revolutionary in the future; so, let’s begin demystifying this
technology.

Blockchain is a combination of three leading technologies:

1. Cryptographic keys

2. A peer-to-peer network containing a shared ledger

3. A means of computing, to store the transactions and records of the network

Cryptography keys consist of two keys – Private key and Public key. These keys help in
performing successful transactions between two parties. Each individual has these two keys,
which they use to produce a secure digital identity reference. This secured identity is the most
important aspect of Blockchain technology. In the world of cryptocurrency, this identity is
referred to as ‘digital signature’ and is used for authorizing and controlling transactions.
The digital signature is merged with the peer-to-peer network; a large number of individuals
who act as authorities use the digital signature in order to reach a consensus on transactions,
among other issues. When they authorize a deal, it is certified by a mathematical verification,
which results in a successful secured transaction between the two network-connected parties.
So to sum it up, Blockchain users employ cryptography keys to perform different types of
digital interactions over the peer-to-peer network.

Types of Blockchain

There are different types of blockchains. They are as follows:

Private Blockchain Networks

Private blockchains operate on closed networks, and tend to work well for private businesses
and organizations. Companies can use private blockchains to customize their accessibility
and authorization preferences, parameters to the network, and other important security
options. Only one authority manages a private blockchain network.

Public Blockchain Networks

Bitcoin and other cryptocurrencies originated from public blockchains, which also played a
role in popularizing distributed ledger technology (DLT). Public blockchains also help to
eliminate certain challenges and issues, such as security flaws and centralization. With DLT,
data is distributed across a peer-to-peer network, rather than being stored in a single location.
A consensus algorithm is used for verifying information authenticity; proof of stake (PoS)
and proof of work (PoW) are two frequently used consensus methods.

Permissioned Blockchain Networks

Also sometimes known as hybrid blockchains, permissioned blockchain networks are private
blockchains that allow special access for authorized individuals. Organizations typically set
up these types of blockchains to get the best of both worlds, and it enables better structure
when assigning who can participate in the network and in what transactions.
Consortium Blockchains

Similar to permissioned blockchains, consortium blockchains have both public and private
components, except multiple organizations will manage a single consortium blockchain
network. Although these types of blockchains can initially be more complex to set up, once
they are running, they can offer better security. Additionally, consortium blockchains are
optimal for collaboration with multiple organizations.

Hybrid Blockchains

Hybrid blockchains are the combination of both public and private blockchains. In a hybrid
blockchain, some parts of the blockchain are public and transparent, while others are private
and accessible only to authorized and specific participants. This makes hybrid blockchains
ideal for use in those cases where a balance is required between transparency and privacy.
For example, in supply chain management multiple parties can access certain information,
but sensitive data can be kept private.

Sidechains

Sidechains are different blockchains that run parallel to the main blockchain, allowing for
additional functionality and scalability. Sidechains enable developers to experiment with new
features and applications without affecting the main blockchain's integrity. For example,
sidechains can be used for creating decentralized applications and to implement specific
consensus mechanisms. Sidechains can also be used to handle transactions of the main
blockchain to reduce congestion and increase scalability.

Blockchain Layers

Blockchain layers refer to the concept of building multiple layers of blockchains on top of
each other. Each layer can have its own consensus mechanism, rules, and functionality
which can interact with other layers. This ensures greater scalability, as transactions can be
processed in parallel across different layers. For example, the Lightning Network, built on top
of the Bitcoin blockchain, is a second layer solution that enables faster and cheaper
transactions by creating payment channels between users.
The Process of Transaction

One of Blockchain technology’s cardinal features is the way it confirms and authorizes
transactions. For example, if two individuals wish to perform a transaction with a private and
public key, respectively, the first person party would attach the transaction information to the
public key of the second party. This total information is gathered together into a block.

The block contains a digital signature, a timestamp, and other important, relevant
information. It should be noted that the block doesn’t include the identities of the individuals
involved in the transaction. This block is then transmitted across all of the network's nodes,
and when the right individual uses his private key and matches it with the block, the
transaction gets completed successfully.

In addition to conducting financial transactions, the Blockchain can also hold transactional
details of properties, vehicles, etc.

Here’s a use case that illustrates how Blockchain works:

 Hash Encryptions

blockchain technology uses hashing and encryption to secure the data, relying
mainly on the SHA256 algorithm to secure the information. The address of the
sender (public key), the receiver’s address, the transaction, and his/her private key
details are transmitted via the SHA256 algorithm. The encrypted information,
called hash encryption, is transmitted across the world and added to the blockchain
after verification. The SHA256 algorithm makes it almost impossible to hack the
hash encryption, which in turn simplifies the sender and receiver’s authentication.