In order to properly understand block chain, there are some key core concepts students should be . These key concepts include security, trust less-ness, decentralization, distributed ledgers, group consensus, and immutability. section, and throughout this study guide, these topics presented and analyzed. understand these key concepts and more, it’s important with .
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 be programmed to record not just financial transactions but virtually everything .”
Impact of Block chain in industries
Problem with Traditional System
Need to trust
Components of Blockchain
- A peer-to-peer (P2P) network connecting participants and propagating transactions and blocks of verified transactions, based on “gossip” protocol.
- Messages, in the transactions, representing state transactions.
- A set of consensus rules, governing what constitutes a transaction and what makes for state transition.
- A state machine that processes transactions the consensus rules.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 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 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 called Digi Cash.
It was cryptography security and anonymity
The idea had the same problem traditional currency, it requires a central or a single point of trust.
Digi cash declared bankruptcy in 1998.
Many other tried faced fate.
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.
(a) Secure digital signatures
(b) Not requiring of party
(d) Hashing the transactions together
4. Satoshi Nakamoto is an unknown person or group , 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 bitcoin network.
Users sign transactions with keys to unlock and spend it by transferring it to owner.
Keys are often stored digital wallet.
Possession of keys only prerequisite to spending bitcoin, putting the control entirely hands user.
Created through a process called “Mining”
Every 10-minutes (on average)
Minor validate transactions
Rewarded with bitcoin
A Private key Generates a Public Key
A Public obtained by subjecting key to of mathematical operations defined set of standards Elliptic Curve Cryptography(ECC).
Whereas an integer, a public a 2D coordinate composed of two integers. To make a public key easier to process, it transformed into 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: key, which 42, can be transformed mathematically into a public key.A public 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 key
No network at any point generation of key or the corresponding address. Every computer on the Bitcoin network knows about the mathematical relationship between public keys.