1. What is Blockchain?
• Blockchain is a peer to peer (no third party) distributed network which
acts as a decentralized database.
•We can relate blockchain to a linked list with a layer of Hashing on top of
each block.
•Each block is linked with the previous block with a hash.
•Blocks contain transactions into them and each block has a specific size.
•The peers who participate in the network are called nodes.
•Each node has a copy of the entire chain/decentralized database, which
makes it impossible to alter data ensuring immutability.
7. Encryption and decryption
● Encryption is a two-way function; what is encrypted can be decrypted with the
proper key. Hashing, however, is a one-way function that scrambles plain text
to produce a unique message digest.
● With a properly designed algorithm, there is no way to reverse the hashing
process to reveal the original password. An attacker who steals a file of hashed
passwords must then guess the password.
● To encrypt data you use something called a cipher, which is an algorithm – a
series of well-defined steps that can be followed procedurally – to encrypt and
decrypt information. The algorithm can also be called the encryption key.
8.
9. A consensus algorithm is a procedure through which all the peers of the
Blockchain network reach a common agreement about the present state
of the distributed ledger.
What is consensus?
● How are any decisions made?
● How does anything get done ?
13. Proof Of Work!
● Proof of work is a requirement to define an expensive computer calculation, also
called mining, that needs to be performed in order to create a new group of
trustless transactions (the so-called block) on a distributed ledger called
blockchain.
● Mining serves as two purposes:
○ To verify the legitimacy of a transaction, or avoiding the so-called double-
spending.
○ To create new digital currencies by rewarding miners for performing the
previous task.
The Ethereum and the Bitcoin Blockchain use Proof of Work presently.
14. When you want to set a transaction this is
what happens behind the scenes...
15.
16. Proof Of Stake!
● Proof of stake will make the consensus mechanism completely virtual. While the
overall process remains the same as proof of work (POW), the method of reaching
the end goal is entirely different.
● In POS, instead of miners, there are validators. The validators lock up some of
their Ether as a stake in the ecosystem. Following that, the validators bet on the
blocks that they feel will be added next to the chain. When the block gets added,
the validators get a block reward in proportion to their stake.
● In Proof-of-Stake, forgers are always those who own the coins minted.
