Blockchain technology holds enormous potential to optimize and improve basic services in finance and commerce. Here, “block” is digital information, and “chain” is a sequential database or distributed ledger where information is recorded and stored.
Each blockchain is a DApp (decentralized application) that runs on a P2P basis.
Main components of the blockchain architecture
- Node is a user or a computer in the blockchain architecture.
- The transaction is the smallest part of a block (records, information).
- A block is a data structure used to store a set of transactions that is distributed to all nodes in the network.
- A chain is a sequence of blocks in a specific order.
- Miners are specific nodes that perform the block validation process before adding it to the blockchain structure.
- Consensus (protocol) is a set of rules and agreements for blockchain operations performance.
Open source technology allows you to store transaction data in blocks. Each block includes time-stamped transaction records, with each block being linked to the previous one, thus creating a chain.
The information stored in the blockchain is completely transparent and permanent. No one can change or delete the data of the previous transaction from the distributed ledger.
The existing distributed ledger stores immutable records of all transactions, starting with the first one. This allows you to check all stages of the transaction and reduce the risk of fraud.
Blockchain greatly simplifies the direct transfer of trading assets and increases confidence in their origin.
Each digital asset receives a unique identification code called a hash that cannot be tampered with or altered. Hash is a cryptographic code that was created using special algorithms.
The blocks’ records uniqueness and immutability of the distributed ledger give new opportunities for the provision of additional financial services based on the trade-in physical goods.
What is stored on the Blockchain?
- Information on users that are involved in transactions and the unique “digital signature”.
- A unique hash code is assigned.
The above information is grouped into a block along with information on other users’ transactions.
Each transaction goes through a confirmation procedure. The digital signature of the seller and the recipient is registered only after approval of the transaction amount. And this transaction is stored with hundreds of thousands of similar transactions.
The confirmation procedure is on the protocol.
Most popular protocols:
Protocols for the public, private blockchains, and consortium blockchains:
- Byzantine Fault Tolerance (BFT) protocols;
- Delegated Byzantine Fault Tolerance (DBFT);
- Practical Byzantine Fault Tolerance (PBFT);
- Federated Byzantine Agreement (FBA).
Originally published at https://getblock.io on November 13, 2020.