Dayan Faheem is a 13-year-old Pakistani Student explain the concept of Blockchain.
You’ve probably heard of the term blockchains but you don’t know what it means and soon as you hop on the internet you start hearing words like proof of work, ledger, miner, cryptocurrency and yada yada nevertheless this article is going to explain it you everything and will clear your concept on blockchain by answering these questions; what is a blockchain, how are blockchain related to cryptocurrency, are blockchain the future of the world, what kind of job is of a miner and etc. We will do this by starting from the beginning and progress along.
What is a blockchain, to first understand blockchain we must understand what is a block? A block holds a record of something on the internet forever and this record can be of anything, from bank balance to medical records and multiple of these records in a chain would be considered a blockchain.
Cryptocurrencies are a form of digital currency that reside on blockchains, when a transaction using a cryptocurrency happens a record has been created in the form of a block different cryptocurrencies have different methods of recording a transaction, in an example let’s take bitcoin as the cryptocurrency but first let me tell you the method used by bitcoin for recording which is the sender’s name receiver’s name and amount plus the users bank balance, so the example is Asad, Akbar and Azhar owe 2 bitcoin each to Jawed they each pay have 5 bitcoin including Jawed so when the payback to Jawed the transaction will be recorded in the following method.
Asad gives two BTC to Jawed
Asad has 3 BTC Jawed has 7 BTC
Azhar has 5 BTC Akbar has 5 BTC
Azhar gives two BTC to Jawed
Asad has 3 BTC Jawed has 9 BTC
Azhar has 3 BTC Akbar has 5 BTC
Akbar gives two BTC to Jawed
Asad has 3 BTC Jawed has 11 BTC
Azhar has 3 btc Akbar has 3 BTC
Now all of these blocks in a chain are known as blockchain but they are also known as Ledgers these ledgers are publicly distributed to the whole network, so that everyone can see all the transactions that have taken place.
Now let’s take a closer look at how a transaction actually looks but before that let’s clear few concepts
Every user in the blockchain has two keys
- Key number one is the public key, which is an address known by every user in the network
- Key number two is private key, which is only known to the user of that key
Azhar paying back to Jawed
- Azhar writes the amount of BTC he sends to Jawed, plus both their wallet addresses
- Azhar then puts on a hashing algorithm using his own private key
- Azhar also uses his private key to sign the transaction digitally
- Jawed uses his public key to transmit this output
- Jawed uses his private key to decrypt the transaction
What does a block contain?
- Data: data is different for different blockchains but bitcoin uses sender, receiver and amount of coins’ given
- Hash: hashes identify a blocks content additionally it’s always unique, it’s very easy to detect a change in the block because when the contents of a block changes so does the hash
- Previous hashes: remember that blocks in a chain will always have a previous block, a single block will have a hash of the block before them, this helps in case if a block is hacked and its contents change the hash will also change, to detect the correct hash you can just look to the block after’s previous hash. The initial block’s hash is 00000
Proof-of-Work and Miners (Bitcoin based transaction)
Proof of work is a simple mechanism that is used to tamper with hackers, which slows the addition of new blocks to the chain, the person who adds and validates these blocks is called a miner, to do this a miner must solve a complex mathematical equation, for which they are rewarded about 12.5 btc
Dayan Faheem is a 13-year-old Pakistani Student currently studying in the 9th class at BeaconHouse School System. He is quite passionate about blockchain and Web3. In his first attempt to explain, he writes an article for NFStudio24 on What is Blockchain linked with the international industry.