Key concepts about blockchain
Public key encryption
Hashing.One way encryption
A hash function takes some and creates some output data
To expand on , a hash function takes on the input of any length and creates an output of fixed length.
It takes an input string and created a string of random letters and numbers “a0680c4n2p04bc744ce1067712b”
This is because of the message digest.
It is also digital fingerprint. way this digest can represent string. If I try & modify this the message digest is be completely different.
One way Street
Another property of hash functions is that .
It is very easy to calculate a message digest but given the digest, it is near impossible the input.
Again, not impossible but it’ll take another billion years approximately.
- Cryptography——-Public key encryption Demo
Bitcoin thought of as an open messaging system secured by public-key cryptography.
In contrast to other systems protected by username and password logins, Bitcoin is secured through digital message signatures created with private key.
This single point of access places high value on the secure generation, use, and storage keys.
Transaction Input and Output
Transaction tells the network that the owner of a of bitcoin has authorized the transfer of those bitcoins owner.
The new owner can now spend these bitcoins by creating another transaction that authorized a transfer owner, and soon, in a chain of ownership.
Transactions are like lines ledger, in simple terms, each transaction contains one or more”inputs,(like Debits)
On side of the transaction, there are one or more “outputs”,(like credits)
The inputs and outputs (debits & credits) necessarily add up to amount.
Instead, outputs add up to slightly inputs, difference represents an implied “transaction fee, a littlepayment collected by the miner who includes the transaction ledger.
The transaction also contains proof of ownership amount of bitcoin(inputs) whose value is transferred, a digital signature from the owner, be independently validated by anyone.
Transactions move value from transaction inputs to transaction outputs.
An input is where the coin value is coming from, usually a previous transaction output.
Outputs from one transaction used as inputs new transaction, thus creating o ownership value is moved from address .
Bitcoin transactions can include outputs that reference both an address of the new owner and an address of owner called the change address.
As transaction inputs, the currency notes, cannot be divided.
If a $5US bill to store but use a $20US to the item, you expect to receive $15US dollars in change.
The same concept applies to bitcoin transaction inputs.
If an item that costs 5 bitcoin but only had a 20 bitcoin input to use, you would send one output of 15 bitcoin back to yourself as a change.
Peer-to-peer ledger of balances
Can never be changed, transactions are permanent.
each bitcoin is equal, maintains it value(not )
anyone can participate by downloading software.
down to 8 decimal places
21 million coins ever
can send any amount in seconds, compared to gold
Blockchain uses old technologies
Computer network Technology/Peer-to-Peer network
Problem: Private key solve
Bitcoin solves both problems through a system called public-key cryptography. This system uses two pieces to authenticate messages.
A public key identifies a sender or recipient and can be distributed to others.
A private key creates an unforgeable message signature.
Public keys are mathematically linked through a signature algorithm, a mathematical procedure for creating identities, signing messages, and validating signatures.
Six things about private keys in the mind
A private Just
Transactions are Messages Signed with key
Anyone who knows Your Private key Can Steal Your Funds
A private Generate a Public key which Generates an Address
Security depends on choosing Private Key
Private Keys are (somewhat) portable