Every day you hear about
Blockchain technology like Bitcoin, IOTA, and Ethereum, but do you know what
Blockchain, Cryptocurrency, and Smart Contracts are? How does it all works? How
can Blockchain be used in business, and how will Blockchain change the world?
This article aimed to answer all these questions.
In the 21st century is all about technology with the
increasing need for modernization in our day-to-day lives, people are accepting
new technology from using a remote to controlling devices to using voice notes
for giving commands. Modern technology has made space in our regular lives; we
basically can't live without them. Technology like augmented reality and IoT
devices that have obtained pace in the past decade, and now there's a new
addition to the pack, i.e., Blockchain Technology.
Blockchain is the revolutionary technology affecting
different industries amazingly it introduced
in the markets with its very first modern application
which is bitcoin. Bitcoin is a form of digital currency, aka Cryptocurrency,
which can be used in the place of authorization money for trading.
There's a common misconception among people that
Bitcoin and Blockchain are the same. However, that is not the case. Creating
Cryptocurrency is one of the applications of blockchain technology, and other
than Bitcoin, numerous applications are being developed based on the blockchain
technology.
What is Blockchain
technology?
The blockchain technology introduced in 2008, along
with the digital currency, which is Bitcoin.
Blockchain technology is a continuous sequential chain
of the block containing data or information — the data in the blockchain store
in "Blocks" made of computer code. "Blocks" can be
programmed to represent any data — from money to a birth certificate. Every
single 'Block' connected to other blocks securely through encryption,
consequently in the 'chain.' This Chain can be compared to the likes of
a traditional database as it contains an aggregation of data.
In simple terms, Blockchain can be described as a data
structure that holds transactional records and while ensuring security,
transparency, and decentralization. A blockchain is a distributed ledger that
is entirely open to everyone on the network.
Each transaction on a blockchain is secured with a
digital signature that proves its authenticity.
Blockchain—Digital
Signature
A digital signature (DS) is the detail of an electronic
document that used to identify the person transmitted data. DS makes it
possible to ascertain the non-disortion status of information in a report once
signed and to check whether or not the signature belongs to the key certificate
holder. The digital signature is used today all over the internet. Whenever you
visit a website over ACTPS, you are using SSL(Secure Sockets Layer), which uses
digital signatures to establish trust between you and the server.
Digital Signature
(DS) Algorithms
Advantages:
·
Convenient distribution of public keys; no
security is required.
·
Bigger networks have a much smaller number of
key vs. asymmetric cryptosystems.
Disadvantages:
·
Low operating speed
·
High computing costs in connection w/ ensuring
encryption strength relative to falsification attempts.
·
It allows a malicious user who does not know a
secret key to generate a signature for the documents.
The hardware application of the RSA algorithm includes
secure voice telephones, Ethernet network cards, smart cards, large-scale
applications in cryptographic equipment.
ElGamal Encryption System — This is another
public-key encryption algorithm. Security features of this algorithm stem from
the difficulty of computing discrete logarithms in the limited field. The
ElGamal encryption system encompasses both encryption and digital signature
algorithms.
Advantage:
·
Probabilistic nature of encryption
·
Ability to generate a digital signature for a
large number of messages using just one secret key.
Disadvantage:
·
Doubling of the encrypted text length as
compared with the initial one, causing longer computing times and the stricter
requirement for communication channel security.
This solution employed in public-key certificates to
protect connections in TLS (SSL, HTTPS, WEB), messages in XML Signature (XML
Encryption), and the integrity of IP addresses and domain names (DNSSEC)
DSA — This public-key encryption algorithm
designed to create an electronic signature. A signature is created 'in
private,' but it can be verified 'in public.' In other words, there is only one
subject that can create a signature added to a message, but anyone is in a
place to check whether or not the signature is correct.
Advantages:
·
Shorter signature length despite the identical
strength levels
·
Lower signature computation speed
·
Reduced required storage space
Disadvantages:
·
Signature verification must entail complicated
remainder operators, where the quickest possible action hampered.
ECDSA — this is a public-key encryption
algorithm designed to create an electronic signature and is a modification of
the DSA algorithm. Being defined in the group of elliptic curve points rather
than over the rings of integers is what makes it stand out. The ECDSA algorithm
is resistant to an attack based on a fitted open text with the actual
falsification.
Advantages:
·
Ability to operate in much lower fields than in
cases where the DSA algorithm is employed
·
No application performance issues
·
Rapid signing and verifying process
·
Compliance with ever-growing protection
requirements
·
Support for national information protection
standards
Disadvantage:
·
A chance pf error makes it possible a select a
private-key value such that identical signature for different documents can be
obtained.
Elliptic curve algorithms used in TLS, PGP, SSH.
GOST R 34.10-2012 — This is the Russian standard
describing the DS generation and verification algorithms.
Advantages:
·
GOST 32.10-2012 contains no recommendations for
curve uses, proposing only a set of requirements for such curves and allowing
the standard to keep consistent whenever new results about 'week' classes of
the elliptic curve come up.
Disadvantages:
·
A lack of recommended parameters requires
further efforts to select and justify those parameters, have them agreed by the
regulators, and develop guidelines.
Schnorr Signature Algorithm — The security
features of the scheme develop on the computational complexity of discrete
logarithms. Being a modification of the ElGamal encryption system and the
Fiat-Shamir scheme, it still offers a benefit in the form of a shorter
signature size.
Rapid Digital Signature — The principle of rapid
signing underpin the following DS algorithms: BLS, Diffie-Hellman, and the
Fiat-Shamir scheme. The option leveraged by algorithms with a shorter number of
computations. The scheme in question also involves the processes of generating
user key pairs, signature computation, and verification functions.
Advantage:
·
Simplified computing, pushing up performance
levels
Disadvantage:
·
Substantially under-explored
·
Limited to groups with the pair matching
function
GMR Algorithm — This is a modification of the
RSA. The strength levels of the algorithm stem from the problem of integer
factorization. Its advantage over RSA is the protection from the attacks of
adaptively selected messages.
Rabin Cryptosystem — This is a signature scheme
with certain strength levels. Security features of this algorithm stem from the
difficulty of integer factorization. This algorithm has not become widespread.
Advantage:
·
Higher operating speed vs. RSA
Disadvantage:
·
The necessity of selecting a valid message out
of four possible ones
·
Susceptible to an attack based on the chosen
ciphertext.
EdDSA Algorithm — This is a signature scheme
with the employment of the schnorr option and elliptic curves. The EdDSA
algorithm relies on the Ed25519 signature scheme based on SHA-512/256 and
Curve25519.
Advantage:
·
High speed
·
Independence of the random number generator
·
High performance
How does Blockchain
Works?
The Blockchain is a ledger that can store an unlimited
amount of information. In the case with Cryptocurrency, it's information about
the transaction which miners/nodes (People who verify and confirm the
purchases) group in blocks. The first successful and widespread application of
the Blockchain technology came into being in the year 2009 by Satoshi Nakamoto.
He created the first digital Cryptocurrency called Bitcoin through the use of
Blockchain technology.
Blockchain, as the name suggests, is a chain of blocks
where each block is an equivalent of one or more transactions. These
transactions placed in the block by miners who are special nodes. In Bitcoin
Blockchain, these nodes are called miners, and they use the concept of
proof-of-work to process and validate transactions on the network. For a
transaction to be valid, each block must refer to the hash of its preceding
block. This technology allows digital information to distributed but not
copied, which essentially means that one individual piece of data can only have
one owner with full control over that data.
1.
A Blockchain network makes use of public and private
keys from a digital signature, ensuring security and consent.
2.
Once the authentication ensured through these keys, the
need for authorization arises.
3.
Blockchain allows participants of the network to perform
mathematical verification and reach a consensus to agree on any particular
value.
4.
While making a transfer, the sender uses their
private-key and announces the transaction information over the network. A block
created contained information such as digital signature, timestamp, and
receiver's public-key.
5.
This block of information broadcasted through the
network, and the validation process starts.
6.
Miners all over the network start solving the
mathematical puzzle related to the transaction to process it. Solving this
puzzle requires miners to invest their computing power.
7.
Upon solving the puzzle first, the miner receives
rewards in the form of bitcoins. Such kind of problems referred to as
proof-of-work mathematical problems.
8.
Once the majority of nodes in the network come to a
consensus and agree to a standard solution, the block is timestamped and added
to the existing Blockchain. This block can contain anything from money to data
to messages.
9.
After the new block added to the Chain, the existing
copies of Blockchain are updated for all the nodes on the network.
Blockchain Features
Blockchain technology has been around for quite some
time now, still actively being in the spotlight. The technology first came into
the limelight through bitcoin, a much famous cryptocurrency. Sadly, now it's
become too much overrated and volatile compared to order cryptocurrencies.
Blockchain technology isn't just a backup network for cryptocurrencies, but it
offers a lot more. So what are the blockchain features that makes it so
irresistible? Why is it gaining so much popularity?
·
Can't be Corrupted
The Immutable property of a blockchain refers to the
fact that any data once is written on the Blockchain cannot be changed. To
understand immutability, consider sending email as an example. Once you send an
email to a bunch of people, you cannot take it back. To find a way around,
you'll have to ask all the recipients to delete your pretty dull email.
·
Decentralized Technology
Blockchains are decentralized in nature, meaning that
no single person or group holds the authority of the overall network. While
everybody in the system has a copy of the distributed ledger with them, no one
can modify it on his or her own.
1.
Less failure
2.
User control
3.
Less prone to breakdown
4.
No third-party
5.
Zero scams
6.
Transparency
7.
Authentic nature
·
Peer-to-Peer (P2P) Network
With the use of Blockchain, the interaction between two
parties through a peer-to-peer model quickly accomplished without the
requirement of any third party. Blockchain uses P2P protocol, which allows all
the network participants to hold an identical copy of transactions, enabling
approval through a machine consent. For Example, if you want to make a
transaction from one part of the world to another, you can do that with
Blockchain all by yourself within a few seconds. Moreover, any interruptions or
extra charges will not deduct in the transfer.
·
Tamper-Proof
With the property of immutability embedded in
Blockchains, it becomes easier to detect the tampering of any data. Blockchain
is considered tamper-proof as any change in even one single block can be identified
and addressed smoothly.
Types of Blockchains
There are three primary types of Blockchains, which do
not include traditional databases or distributed ledger technology or DLT that
are often confused with Blockchains.
·
Public Blockchain — As the name suggests,
a public blockchain is a permissionless ledger and can be accessed by any and
everyone. Anyone with access to the internet is eligible to download and access
it. It can also check the overall history of the blockchains, usually reward
their network participants for performing the mining process, and maintaining
the immutability of the ledger — for Example, Bitcoin, IOTA, and Ethereum.
·
Private Blockchains — Contrary to the
public Blockchain, private Blockchains are the ones which are shared only among
the trusted participants. The overall control of the network is in the hands of
the owners. Example applications include database management, auditing, etc.
which are internal to a single company, and so public readability may be
undesirable. Private Blockchains are a way of taking advantage of Blockchain
technology by setting up groups and participants who can verify transactions
internally.
Remember, Blockchain is still in its early stages. It
is unclear how the technology will pan out and will be adopted. Many believe
that private Blockchain will evolve just the way private LANs or WANs did in
the 1990s. They eventually ceased to exist in favor of the more broad-based,
public internet. Example of private Blockchains is MONAX, Hyperledger, R3 Corda,
and Multichain, etc.
·
Consortium Blockchain — A Consortium
Blockchain draw properties from public and private Blockchain networks. Think
of it as a private network, which is 'Slightly Public.' In a consortium
network, the power does not reside with a single authority. It is operated
under the leadership of a group. So, a consortium Blockchain is private for a
group of companies or entities. Unlike the Public Blockchain network, the
Consortium network does not allow any person with the internet connection to
participate in the process of verifying transactions. Consortium Blockchains
are faster and provides higher scalability and transaction privacy. Consortium
Blockchains are mostly used in the banking sector. A pre-selected set of nodes
maintains the consensus mechanism.
For Example, imagine a consortium of 15 financial
institutions, each of which represents a node in the network and of which ten
must sign every block for a block to be valid. The right to read the Blockchain
may not be public or restricted to a set of participants only.
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