Blockchain Quick Reference
What is Blockchain?
- A decentralized digital ledger recording transactions across multiple computers.
- Each block contains transaction data; once added, it is immutable.
- Enables secure, transparent, peer-to-peer transactions without intermediaries.
Who invented Blockchain?
- Introduced by Satoshi Nakamoto in 2008 for Bitcoin.
Key features of Blockchain
- Decentralization: No central authority.
- Immutability: Data cannot be altered.
- Transparency: Transactions are viewable.
- Security: Cryptographic protection.
Why is Blockchain important?
- Provides a secure, transparent, and efficient way to record transactions.
- Reduces fraud, errors, and reliance on intermediaries.
History of Blockchain
- Began in 2008 with Satoshi Nakamoto for Bitcoin.
- Evolved to support other cryptocurrencies (e.g., Ethereum) and industries.
What is a Block?
- A container holding transaction data, timestamp, and a reference to the previous block.
- Blocks are linked to form the blockchain; data within is immutable once written.
What does "Mining" mean in Blockchain?
- Validating transactions and adding them to the blockchain.
- In Proof-of-Work (PoW), miners solve puzzles and are rewarded with cryptocurrency.
What is a Smart Contract?
- A self-executing contract with terms written in code.
- Automatically executes actions when predefined conditions are met (e.g., on Ethereum).
What is a Public Blockchain?
- Open and decentralized; anyone can join, read, and write data (e.g., Bitcoin, Ethereum).
What is a Private Blockchain?
- Access restricted to authorized participants; controlled by a central organization.
What is a Consortium Blockchain?
- Controlled collaboratively by a group of organizations.
What is a Hybrid Blockchain?
- Combines elements of public and private blockchains.
What is a Node in Blockchain?
- An active device connected to the network that validates and relays transactions.
What is a Cryptocurrency?
- Digital money using cryptography for security; operates on a decentralized network (e.g., Bitcoin, Ethereum).
What does Hashing mean in Blockchain?
- Converts data into a fixed-length string (digital fingerprint) using a cryptographic hash function.
- Links blocks securely as each block contains the hash of the previous one.
What is Decentralization in Blockchain?
- Distribution of control across a network of independent participants, eliminating single points of failure.
What is a Ledger in Blockchain?
- A record-keeping system storing transaction data; decentralized and immutable.
What is a Peer-to-Peer Network?
- A decentralized network where participants directly exchange data without a central server.
What is Proof of Work (PoW)?
- A consensus mechanism where miners solve cryptographic puzzles to validate transactions and earn rewards (e.g., Bitcoin).
What is a Token in Blockchain?
- A digital asset or unit of value issued on a blockchain, representing ownership or currency; can be fungible or non-fungible (NFTs).
Blockchain Applications
- Healthcare: Securely stores and shares medical records.
- Cross-Border Payments: Enables fast, secure, real-time payments.
- Voting Systems: Increases transparency and security in voting.
- Supply Chain: Provides real-time tracking of goods.
- Real Estate: Facilitates secure property transactions and ownership verification.
Public vs. Private Blockchains
- Public: Open, decentralized (Bitcoin, Ethereum).
- Private: Permissioned, restricted, controlled by a single entity.
How Consensus Algorithms Work (PoW and PoS)
- PoW: Miners solve puzzles; capital-intensive.
- PoS: Validators chosen based on stake; energy-efficient.
- Both ensure secure, agreed-upon transaction history.
How a Blockchain Transaction Works
- User initiates a transaction, which is broadcast, grouped into a block, and validated by the consensus mechanism.
- Once validated, the block is added to the chain.
Transparency and Security in Blockchain
- Decentralized ledger copies ensure transparency.
- Cryptography secures transactions; linked blocks prevent tampering.
Role of Miners
- Validate and secure transactions, earning rewards and maintaining ledger accuracy.
What is a dApp?
- A decentralized application running on a blockchain, using smart contracts for logic; often without centralized control.
Architecture and Networks
- Decentralized, distributed architecture; crytographically linked blocks.
- Types include public, private, consortium, and hybrid.
How Blockchain Enables Decentralization?
- Data is distributed across nodes, with no central authority, increasing resilience.
How Does Blockchain Work with Consensus and Transactions?
- Transactions are validated by nodes/miners via consensus, then added as new blocks.