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Blockchain Introduction

Definition of Blockchain

Blockchain is a decentralized and distributed ledger technology that allows multiple participants to maintain a shared database of records, known as blocks, in a secure and transparent manner. It is designed to ensure the integrity, immutability, and consensus of data without relying on a central authority.

Goal of Blockchain

The goal of blockchain is to allow digital information to be recorded and distributed, but not edited.

Types of blockchain

1. Public blockchain

A public, or permission-less, blockchain network is one where anyone can participate without restrictions. Most types of cryptocurrencies run on a public blockchain that is governed by rules or consensus algorithms.

2. Permissioned or private blockchain

A private, or permissioned, blockchain allows organizations to set controls on who can access blockchain data. Only users who are granted permissions can access specific sets of data. Oracle Blockchain Platform is a permissioned blockchain.

3. Federated or consortium blockchain

A blockchain network where the consensus process (mining process) is closely controlled by a preselected set of nodes or by a preselected number of stakeholders.

Key concepts of blockchain include:

  1. Decentralization:
    • Unlike traditional centralized systems, blockchain operates on a decentralized network of computers called nodes.
    • Each node has a copy of the entire blockchain and participates in the validation and verification of transactions.
  2. Distributed Ledger:
    • The blockchain is a digital ledger that records a chronological sequence of transactions.
    • Each transaction is bundled into a block, and multiple blocks are linked together to form a chain.
    • This distributed ledger is shared among all participating nodes, providing transparency and eliminating the need for a central authority.
  3. Transparency and Immutability:
    • Once a transaction is added to the blockchain, it becomes immutable and cannot be altered or deleted.
    • The transparent nature of blockchain allows anyone to view the transaction history, promoting trust and accountability.
  4. Cryptography:
    • Blockchain utilizes cryptographic techniques to secure and protect the integrity of data.
    • Hash functions are used to generate unique digital fingerprints (hashes) for each block, ensuring the immutability of the data.
    • Digital signatures provide authenticity and verify the identity of participants.
  5. Consensus Mechanisms:
    • Blockchain relies on consensus mechanisms to achieve agreement among nodes on the state of the blockchain.
    • Common consensus algorithms include Proof of Work (PoW), Proof of Stake (PoS), and Practical Byzantine Fault Tolerance (PBFT).
    • These mechanisms prevent double-spending and ensure the validity of transactions.
  6. Smart Contracts:
    • Smart contracts are self-executing contracts with predefined rules and conditions encoded within the blockchain.
    • They automate the execution of agreements and transactions between parties, eliminating the need for intermediaries.
  7. Trust and Security:
    • Blockchain promotes trust by providing a tamper-resistant and auditable record of transactions.
    • The distributed nature of the network and consensus mechanisms make it highly secure against fraud, hacking, and unauthorized modifications.
  8. Use Cases:
    • Blockchain technology finds applications in various domains beyond cryptocurrencies, including supply chain management, healthcare, finance, voting systems, real estate, identity management, and more.
    • It enables secure and efficient processes, reduces intermediaries, and fosters transparency and trust.