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A Private key Generates a Public Key

What is a Block chain?

In order to properly understand block chain, there are some key core concepts students should be conversant in. These key concepts include security, trust less-ness, decentralization, distributed ledgers, group consensus, and immutability. during this section, and throughout this study guide, these topics are going to be presented and analyzed. so as to completely understand these key concepts and more, it’s important to start out with the fundamentals.
Block chain is distributed public ledger of immutable transactions, it uses cryptography to secure transactions and blocks.
“The Block chain is an incorruptible digital ledger of economic transactions which will be programmed to record not just financial transactions but virtually everything useful .”
Impact of Block chain in industries
Problem with Traditional System
Centralized control
Need to trust
3rd party/Middleman
No Transparency
Mutable

Components of Blockchain

  • A peer-to-peer (P2P) network connecting participants and propagating transactions and blocks of verified transactions, based on a uniform “gossip” protocol.
  • Messages, in the sort of transactions, representing state transactions.
  • A set of consensus rules, governing what constitutes a transaction and what makes for a legitimate state transition.
  • A state machine that processes transactions consistent with the consensus rules.a sequence of cryptographically secured blocks that acts as a journal of all the verified and accepted transitions.
  • A consensus algorithm that decentralizes control over the blockchain, by forcing participants to cooperate within the enforcement of the consensus rules.
  • A game-theoretically sound in-centralization scheme(e.g; proof-of-work costs plus block rewards) to economically secure that state machine during an open environment.
  • One or more open-source software implementations of the above (“clients”).

It all started with an idea: A digital currency David Chaum first proposed the concept of e-cash in 1982.
David Chaum then founded a corporation called Digi Cash.
It was cryptography security and anonymity
The idea had the same problem as traditional currency, it requires a central financial institution or a single point of trust.
Digi cash declared bankruptcy in 1998.
Many other tried faced an equivalent fate.


Bitcoin

In 2008 as whitepaper was published,”Bitcoin:A peer-to-peer Electronic Cash System” by Satoshi Nakamoto
In 2009 first-ever block of bitcoin, known as the Genesis Block, was mined.
BitCoin uses:
(a) Secure digital signatures

(b) Not requiring the utilization of a 3rd party

(c) Proof-of-work

(d) Hashing the transactions together to make a sequence

4. Satoshi Nakamoto is an unknown person or group of individuals, wrote the Bitcoin paper.

5. Satoshi disappears in December 2010.

What’s Bitcoin?/How it works?

A collection of concepts and technologies.
It behaves like conventional currencies.
Can be purchased, sold, and exchanged for other currencies at specialized currency exchanges.
They are completely virtual with no physical existence.
Fast, secure, and Borderless

How does it work?


Unlike traditional currencies, bitcoins are entirely virtual.
The coins are implied in transactions that transfer value.
Users own keys that prove ownership of bitcoin within the bitcoin network.
Users sign transactions with keys to unlock the worth and spend it by transferring it to a replacement owner.
Keys are often stored in a digital wallet.
Possession of keys is that the only prerequisite to spending bitcoin, putting the control entirely within the hands of every user.
Peer-to-peer system
Created through a process called “Mining”
Every 10-minutes (on average)
Minor validate transactions
Rewarded with fresh bitcoin

A Private key Generates a Public Key

A Public key’s obtained by subjecting a personal key to a group of mathematical operations defined during a set of standards referred to as Elliptic Curve Cryptography(ECC).
Whereas a personal key’s an integer, a public key’s a 2D coordinate composed of two integers. To make a public key easier to process, it is often transformed into one value. One approach appends the Y-coordinate to the x-coordinate. This technique produces an “uncompressed” public key. A “Compressed” public key uses only the x-coordinate with asymmetry flag.
Private key ________ Public key _________________ Address
The private key to address: a personal key, which is simply a variety like 42, can be transformed mathematically into a public key.A public key’s then transformed into an address. Each step is irreversible. This unidirectional underpins Bitcoin’s security model.
A multi-step transformation can shortened public key same as a personal key
No network is required at any point within the generation of a personal key or the corresponding address. Every computer on the Bitcoin network knows about the mathematical relationship between public and personal keys.

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