Key concepts about block chain
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 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 the message digest.
It is also digital finger print. way this digest can represent string.If I try & modify this the message digest are be completing 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 year approximately .
- Cryptography——-Public key encryption Demo
Bitcoin thought of as an open messaging system secured by public key cryptography.
It 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 tell the network that the owner of of bitcoin has authorized the transfer of those bitcoins owner.
The new owner can now spend these bitcoins by creating another transaction that authorized transfer owner,and soon,in a chain of ownership.
Transactions are like line book keeping ledger,in simple terms,each transaction contains one or more”inputs,(like Debits)
On side of the transaction,there are one or more “output”,(like credits)
The inputs and outputs (debits & credits) necessarily add up to amount.
Instead,outputs add up to slightly inputs difference represents and implied “transaction fee, payment collected by the minor who includes the transaction ledger.
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 with bitcoin transaction inputs.
If an item that costs 5 bit coin but only had a 20 bitcoin input to use,you would send one output of 15 bitcoin back to yourself as change.
Bit coin properties
Peer-to-peer ledger of balances
Can never be changed,transactions are permanent.
each bit coin is equal,maintains it value(not bananas)
Permission less and
anyone can participate by downloading software.
down to 8 decimal places
21 million coins ever
can send any amount in seconds,compare to gold
Blockchain uses old technologies
Computer network Technology/Peer-to-Peer network
Problem: Private key solve
Bitcoin solve 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 unforge able message signature.
Public keys are mathematically linked through a signature algorithm,a mathematical procedure for creating identities,signing messages, and validating signature.
Six things about private keys in 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