Exploring Blockchain (Part 1): Distributed Ledger, Generation of Blocks
š¾š±What is blockchain, exactly? I believe many people are still unclear about its specific logic. When we enter a āblockchainā into a search engine, we can obtain the following professional explanation ā
Blockchain is essentially a chain formed by individual blocks, each containing specific information and connected chronologically based on their creation time. This chain is stored on all servers, ensuring security as long as at least one server is operational. Servers in the blockchain system, known as nodes, offer storage and computational support.
Modifying blockchain information requires agreement from over half of the nodes and changes to all nodes. Since nodes are typically controlled by different entities, tampering with blockchain information is highly challenging. Compared to traditional networks, blockchain stands out for its data immutability and decentralization. These features make information recorded on blockchain more reliable and capable of addressing trust issues among people.
I believe, for most people, this remains a challenging concept. Today, we will use some simple methods to help everyone better understand.
Value Exchange in Modern Society
šŖ¢In modern times, people have shifted from the traditional barter system to using nationally endorsed currencies for transactions. The ongoing development of the internet has led to the emergence of digital currencies, further enhancing the convenience of value exchange.
Letās take a look at whatās happening in the comic.
In the comic, the transaction process between people seems to be happening directly through smartphones. However, in reality, these transactions are managed by banks, overseeing the assets of both parties. Throughout the process, there isnāt actually a direct exchange of physical currency; it involves recording information into the systems of two accounts.
Therefore, in traditional monetary systems, establishing a trust mechanism between transacting parties relies on a third party with endorsement. So, what are the issues with this trust mechanism?
How to respond if someone intentionally eliminates third-party organizations?
If hackers invade and delete transaction records, what measures should be taken?
What if the central enterprise accidentally enters the wrong number? What if it is done intentionally?
In the current centralized management system, despite operating smoothly for many years, there are still numerous issues. To address these issues, we need to introduce blockchain technology.
A simple experiment
Blockchain experiment
š¤This experimental idea is very interesting. Letās explore the possible steps and scenarios in more detailļ¼
We selected 10 people who voluntarily gave up third-party institutions to form a simple blockchain network for a preliminary experiment. In subsequent daily life, each person will make a transaction, and everyone must record the transaction in the ledger held by each person.
When a crowd conducts a transaction, everyone needs to verify and confirm the authenticity of the transaction. Once confirmed, everyone needs to record the transaction in the ledger.
So, the transaction is successfully completed. This simple experiment provides an intuitive way to understand the concept of a ādistributed ledgerā.
Storage of Data and Ledger
šAs the number of transactions increases, one ledger can be written every day (the time to pack blocks depends on the performance of each project), so we can call a ledger a āblockā.
Since the balance of the previous ledger yesterday was consistent with the beginning of todayās accounts, the two ledgers are connected together through the relationship between the front and back ledgers, which is the āchainā in āblockchainā.
This transaction process perfectly solves the credibility problem of third-party institutions, with each participant holding a ledger. Even if someone records a false transaction on their own ledger, the other nine people can judge whether someone is lying through their own notes. If someone is found to be lying, the incorrectly recorded ledger will be considered invalid, but others can still safely continue the transaction.
Previously, third parties would make us believe that no matter what they recorded, the content inside would not be tampered with. But in todayās distributed and decentralized system, we have established a more reliable trust mechanism.
Mining and consensus mechanisms
š°As the experiment progressed, people began to feel that recording transactions for everyone was too cumbersome and began to relax. To solve this problem, the experimenters introduced a small incentive measure in the experiment.
Every day, a math problem is provided for everyone to solve. The person who solves the problem first will have the permission to record the transaction. Whenever someone solves the problem, the answer will be published for everyone to check. After confirming that it is correct, everyone only needs to copy the transaction record in the account book. Compared with keeping accounts by themselves, this copying task is easier. In addition, because bookkeepers work harder, they will be rewarded with 50 BTC.
This peer-to-peer information transmission method gradually formed a network and encouraged people to start large-scale calculations every day with rewards, this computing behavior is called āminingā. In addition, everyone agrees with this rule and reaches a common understanding, which is called the āconsensus mechanismā.
The fatal flaw of Bitcoin blockchain
If, among the 10 people, 6 individuals betray and intentionally tamper with the ledger data, this situation is referred to as a ā51% attackā. If the majority of the network decides to betray and deceive the remaining less than half, the entire protocol will inevitably collapse.
This represents the most vulnerable aspect of blockchain. Despite such occurrences being extremely rare, it is essential to bear this in mind. The entire system is built on one assumption: that the majority participating in the transaction network will not betray.
Bitcoin blockchain network
š šThe above experiment is a crucial part of Bitcoin technology. The Bitcoin network has millions of nodes, each serving as a ledger, effectively addressing the issue of achieving fairness and justice without relying on centralized institutions. Each participant is a part of the system, and cheating would require bribing over 50% of the participants, significantly increasing the cost of misconduct.
Therefore, under the mechanism of the Bitcoin blockchain, the more participants, the more trustworthy, making it increasingly difficult for a crisis of trust to occur.
Bitcoin, with its ingenious technical design, successfully addressed the issue of trust, driving the rapid development of blockchain technology and leaving a profound and irreversible impact on peopleās lives. Through decentralized ledgers and cryptographic safeguards, Bitcoin provides a trustless transaction method without the need for third-party trust.
This has not only transformed the financial sector but also given rise to new business models and the digital economy globally. Bitcoinās influence extends beyond the realm of digital currency; it has become a cultural phenomenon, sparking contemplation about a decentralized and digitized future.
