Blockchain and Its Importance

Define Blockchain

Blockchain is a decentralized ledger of all transactions across a peer-to-peer network. The technology enables bitcoin and is applied to many business processes. It not only performs transactions but also ensures the anonymity and security of users.

Why is blockchain important?

Blockchain can operate in a peer-to-peer fashion with zero intervention from third parties.

What are the drawbacks of the current banking system?

• High Transaction Cost

• Account Hacking

• Net Frauds

• Financial Crisis

What features of blockchain can be the solution and alternative to using banks?

• Decentralized system

• Distributed ledger

• Incentives of Validation

• Consensus Algorithm

• Cryptography of Algorithm

Block Creation

What are the parts of a blockchain block structure?

Header: contains the version information, nonce, previous block id, and timestamp.

Merkle: a hash built from the block's transaction identifiers.

List of Records: an identification of hashes that were included in the block's Merkle tree.

What are the two types of blockchain identifiers?

• Block Header

• Block Height

What is a Block Header?

The primary identifier of a block Digital fingerprint that is twice the size of a block header Unique identification of a block of 32-byte hash

What is Block Height?

Position of the block in Blockchain The first digit is of height 0 Each node dynamically identifies a block

Define Blockchain Merkle Tree

The data structure is used for summarizing and verifying the integrity of large sets of data. It is also known as the Binary Hash Tree.

Advantages of Merkle Tree

Less memory is required Proofs are computed quickly and easily Less information is required Integrity Provides validation of data

Define Distributed Ledger

Ledgers store the copy of transactions that have happened. Every single person in the network has a copy of the ledger.