Introduction - What is Blockchain?
Blockchain, as the name suggests, is a chain of blocks linked together. It is a distributed database technology that allows multiple participants to collectively maintain a continuously growing list of data records, known as blocks. Each block contains a series of verified transactions and is cryptographically linked to the previous block, forming a chain-like structure.
Key characteristics of blockchain include:
- Decentralization: No single point of control; data is distributed across multiple network nodes.
- Immutability: Once transactions are confirmed and added to the blockchain, they cannot be altered or deleted.
- Transparency: All transactions are publicly visible, though personal identities remain anonymous.
Applications of Blockchain
Often dubbed the "slowest database," blockchain's most common use case is cryptocurrencies like Bitcoin and Ethereum.
Prerequisites and Resources
Foundational Knowledge
- Data structures: Arrays, linked lists, trees, and hash functions.
Recommended References
- Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction
- Ethereum Whitepapers (Yellow Paper) and Solidity Documentation
Bitcoin Fundamentals
Core Topics Covered
- Cryptography Basics
- Bitcoin’s Data Structure
- Consensus Protocols and System Implementation
- Mining Algorithms and Difficulty Adjustment
- Bitcoin Scripting
- Soft Forks vs. Hard Forks
- Anonymity and Privacy Protection
BTC - Cryptographic Principles
Bitcoin operates on two primary cryptographic concepts: Hashing and Digital Signatures.
Hash Functions
A hash function converts variable-length input x into a fixed-length output y (Hash(x) = y). Bitcoin uses SHA-256, which exhibits these critical properties:
Collision Resistance
- Extremely difficult to find two inputs yielding the same output.
- Ensures data integrity; altered data will have a different hash.
Hiding (Preimage Resistance)
- Outputs cannot be reverse-engineered to reveal inputs.
- Requires a large input space; sometimes expanded using a nonce.
Puzzle Friendliness
- Outputs are unpredictable, requiring brute-force computation (essential for mining).
👉 Learn more about SHA-256’s role in Bitcoin
Digital Signatures
Bitcoin uses asymmetric encryption (public/private keys) for account management:
- Private Key: Used to sign transactions (encrypt).
- Public Key: Allows others to verify signatures (decrypt).
Advantages over symmetric encryption include eliminating key-exchange risks. However, asymmetric encryption is slower.
BTC - Data Structures
Blockchain Design
A blockchain is a linked list of blocks where pointers are replaced with hash pointers—storing the previous block’s hash. This ensures tamper-evidence:
- Modify any block, and its hash changes, breaking the chain.
- Genesis block is the first block; subsequent blocks reference prior hashes.
Each block (1MB) holds ~4000 transactions (~250B each) and includes:
- Block Header: Metadata (e.g., root hash of transactions).
- Block Body: Actual transactions.
Merkle Trees
Transactions are organized in a Merkle Tree—a binary tree with hash pointers:
- Leaf Nodes: Individual transactions.
- Root Hash: Stored in the block header; summarizes all transactions.
Merkle Proofs
Light nodes (e.g., mobile wallets) only store block headers. To verify a transaction’s inclusion:
- Request a Merkle Proof from a full node (adjacent hashes).
- Recompute the root hash locally using the proof.
- Match it against the header’s root hash.
Collision resistance ensures fake proofs are computationally infeasible.
FAQ Section
1. Why is blockchain called a "distributed database"?
It disperses data across multiple nodes, eliminating central authority while maintaining consistency via consensus.
2. How does SHA-256 prevent tampering?
Its collision-resistant property ensures any data change alters the hash, making edits detectable.
3. What’s the difference between soft and hard forks?
- Soft Fork: Backward-compatible protocol updates.
- Hard Fork: Non-compatible changes, often creating new chains (e.g., Bitcoin Cash).
4. Can quantum computers break Bitcoin’s cryptography?
While theoretically possible, current quantum tech lacks practicality. Future upgrades may address this.
👉 Explore Bitcoin’s security mechanisms