How Does Blockchain Technology Work?

There are three main technologies that combine to create Lokachine. None of them is new. Instead, it’s a new orchestration and application.

These technologies are: 1) private key cryptography, 2) distributed network with common ledger and 3) incentive to transaction service, network security and security.

Here’s an explanation of how these technologies work together to ensure digital connections.

Encryption keys
Two people want to go through the Internet.

Each has a private key and a public key.

The main component of this blockchain technology is to create a secure digital identity reference. Identity is based on the possession of a combination of private and public encryption keys.

The combination of these keys can be seen in a fake form of consent, creating a highly useful digital signature.

In turn, this digital signature provides strong control over ownership.

identity
But strong ownership control is not enough to ensure digital relationships. While validation has been resolved, it should be combined with transaction authorization and authorization.

For blockchains, it starts with a distributed network.

Distributed network
The advantage and need for a distributed network can be understood by “if a tree falls in the forest” experiment thought.

If a tree falls in the forest, with cameras to document its fall, we can be pretty sure that the tree has fallen. We have visual evidence, even if the details (why or how) may be unclear.

Much of the value of bitcoin’s blockcain is that it is a large network where proponents, like analog cameras, reach a consensus that witnesses the same thing at the same time. Instead of cameras, they use mathematical verification.

In short, the size of the network is important to secure the network.

It is one of the most attractive features of bitcoin blockchain – it is so large and has accumulated so much computing power. At the time of writing, bitcoin is secured by 3,500,000 TH / s, more than 10,000 major banks in the world combined. Ethereum, which is still no older, is secured by 12.5 TH / s, more than Google and it’s only two years old and still basically in test mode.

System record

When cryptographic keys are integrated into this network, a particularly effective form of digital interaction emerges. The process starts with A. taking their private key, making any message – in the case of bitcoin, that you are sending a sum of cryptocurrency – and attach it to the public key of B.

protocol

Block – containing a digital signature, timestamp and relevant information – is then transmitted to all network nodes.

Network Service Protocol
Realist may challenge the tree falling in the forest thought experiment with the following question: Why would a million computers with cameras waiting to record if a tree fell? In other words, how do you attract computing power to the network service to make it secure?

For open, public blockchains, it involves mining. The mining is built from a unique approach to an ancient question of economics – the tragedy of the commons.

With blockchains, by providing your computer processing power to the network service, there is an award available for one of the computers. The self-interest of the person is being used to help the public service need.

With bitcoin, the purpose of the protocol is to eliminate the possibility that the same bitcoin is used in separate transactions at the same time, in such a way that it will be difficult to detect.

This is how bitcoin aims to act like gold, as property. Bitcoins and their base units (satoshis) must be unique to be owned and have value. To achieve this, nodes serving the network create and maintain a history of transactions for each bitcoin by working to solve mathematical problems of proof of work.

They actually point with their CPU power, expressing their consent to new blocks or rejection of invalid blocks. When most reactors reach the same solution, they add a new block to the grid. This block is timestamp, and can also contain data or messages.

Here is a chain of blocks:

Type, quantity and verification can be different for each blockchain. It is a matter of blockchain protocol – or rules for what is and not a valid transaction, or a valid creation of a new block. The validation process can be adjusted to any blockchain. All necessary rules and incentives can be created when enough nodes come to an agreement on how transactions should be verified.

This is a selection mode of tester, and people only begin experimenting.

We are currently in a period of development blockchain where many such experiments are being run. The only conclusions that have been made so far are that we have yet to understand the Protocol’s skill in the Protocols.


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