Introduction to Ethereum based Blockchain

What is BLOCK CHAIN ?

What is Blockchain ?

Blockchain is a distributed database system that acts as an “open ledger” to store and manage transactions. Each record in the database is called a block and contains details such as the transaction timestamp as well as a link to the previous block. This makes it impossible for anyone to alter information about the records retrospectively. Also, due to the fact that the same transaction is recorded over multiple, distributed database systems, the technology is secure by design.

  1. Elimination of intermediaries
  2. Real-time settlement
  3. Drastic reduction in operational costs
  4. High levels of Transparency
  5. It enables bilateral settlement by eliminating midpoint failures, delays, collateral costs, and minimizes credit risks and exchange spreads.
  • Transaction verification
  • Uniqueness
  • Value transfer
  • Security
  • Cryptocurrency
  • Immutability
  • Platforms for smart contracts
  • Smart property
  • Smart contracts

Where Blockchain can be implemented ?

Banking is not the only industry that blockchain will revolutionise, here a few great examples of why blockchain will be so powerful :

  • Allows the unbanked to send money across borders — over 2 billion people do not have access to bank accounts, blockchain will enable them to send money home and economically better their families.
  • Secure data storage — encrypted data will be fractionally stored across the blockchain, giving only the owner of the data access to the data when required.
  • Contracts — smart contracts can be written into the blockchain to automatically trigger responses based on real time events.

Who controls the blockchain ?

No one controls the blockchain. In other words, it is decentralized by design. The network operates under its own management, on a peer-to-peer basis. Bitcoin, which is now widely accepted by businesses around the world, is managed by its network, not by any central authority.

How powerful is blockchain ?

A current case happened when China endeavored to get serious about clients and control the cryptocurrency inside their border. This sent a brief ripple through the world, where we saw a brief drop in the estimation of Bitcoin. But within days, Bitcoin continued its meteoric rise. In other words, not even a country as powerful and controlling as China can control the blockchain.

Who will use blockchain ?

With blockchain, clients can make exchanges for nearly anything on a shared premise, with no sort of bank association. While banks may lose some of their turf as the agent, many are presently offering and exchanging different digital currencies. They are additionally exploiting the tremendous cost investment funds in information administration and other record keeping. Truth be told, banks are scrambling to enlist blockchain engineers. Experienced blockchain engineers are relatively ready to request any compensation they like.

  1. The bitcoin network consists of thousands of computers (nodes), each of which maintains its own ledger. These computers communicate with each other by sending messages over the Internet.
  2. For example, if A was transferring 10 bitcoins to B, A would click initiate the transaction on the bitcoin wallet, and it would broadcast this transaction to all other bitcoin users.
  1. The software automatically downloads the global ledger — Blockchain, onto the computer.
  2. This distributed ledger allows bitcoin users to see every transaction that has ever happened in bitcoin’s history! Users can even browse through them online on sites.
  1. They have their own Ethereum address and balance.
  2. They can send and receive transactions.
  3. They are activated when they receive a transaction, and can be deactivated.
  4. The Ethereum Virtual Machine runs a turing complete language.
  5. They have a fee per CPU step, with extra for storage.
  6. The user can run the application on their local blockchain.
  1. X wants to send 1 ethereum to Y who also has a wallet.
  2. Y sends his ethereum wallet address and public key to X.
  3. X creates transaction message with Y’s address and transaction amount.
  4. X signs transaction with his private key and announces his public key for signature verification
  5. X broadcasts the transaction on ethereum network for all to see.

*note:The Public Key is hashed with SHA-3 to produce a 256-bit output. The upper 96 bits are discarded, and the lower 160 bits become the Account Address.

Benefits of Blockchain :

  1. Transparency: All transactions are publically recorded and available for scrutiny.
  2. Security: The ledger is distributed across thousands of computers, meaning a practical hack is near-impossible.
  3. Risk: No single authority has control, which means if there is a fault, the rest of the network continues.
  4. Privacy: The user, or bitcoin owner, is anonymous and doesn’t need to provide ID credentials.
  5. Dependency: Use of the blockchain eliminates dependency on the base layer service for functionality.
  6. High Network Effects: There can be substantial benefits from very large groups of people (or even everyone) using the same service.