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Fundamental Blockchain: A Cheat Sheet

by Luca Burkhardt

What is a peer-to-peer distributed system?

In a distributed system, computers are paired with one another rather than connecting to a central computer first. It’s called peer-to-peer, because computers pair with each other rather than a central ‘middle-man’. Purely distributed peer-to-peer system form a network of equal members that ​interact directly with one another​​ without having central coordination. In a distributed system, the entire system runs on the computing power of connected computers. These are also called nodes. Typically in blockchain, it’s basically an ​open database ​​running on all of the connected computers. The database consists of a record of owners and the objects they own. This database is also called a ​ledger​​.

So, until now, we have a database of owners (and the things they own) that runs on a collection of computers. But there is one ​big problem​​.

So what is trust and integrity?

Whether people use a decentralized system depends on two things: trust and integrity. Integrity refers to the ​technical reliability​​ of the system i.e. that it produces the correct results or that the computers do not fail. Concretely, integrity means that the system can only make true statements about the ownership and ensure that only the owner can transfer the property rights to others. Trust, on the other hand, refers to the reliability of the ​people themselves​​ participating in system i.e. whether participants are lying or sending false information. Concretely, this means that the owners are actually transferring something that exists. So this is trust and integrity.

What is the blockchain?

This is the problem the blockchain is meant to solve. It is meant to ensure that a peer-to-peer distributed system maintains trust and data integrity. So how the f**k does it do that? Well, there are ​several technologies​​ blockchain uses to ensure trust, integrity and security.

First Method: Verifying Agents

The blockchain has three functions to ensure that ​only you can access and change​​ your data: Identification, authentication and authorization.

  1. Identification​​: Claim to be somebody (for example: stating a name)

  2. Authentication​​: Verifying you actually that someone (for example: face or fingerprint on anID-card)

  3. Authorization​​: Granting access to something as a result due to your identity.

So, using this 3-step process, ​only​​ authorized people can make changes in the distributed database. In the context of ownership, only people who can verify their identity can transfer ownership and make an updated in the blockchain database. The three-step process is achieved using cryptography​​.

Second Method: Multiple ledgers

Having a database stored on one computer could be very risky. The computer could be destroyed or hacked. This is when the​ ​​peer-to-peer distributed element comes in. If the database were saved on multiple independent computers, this one make it significantly increase security. The independent computers would individually store data and process requests. Once all computers agree on the update to the open database, the change will occur. The ​blockchain algorithm​​ takes care of this process.

For more about how cryptographic verification or how the blockchain algorithm distributes tasks amongst nodes, look out for the coming articles!

#Blockchain #Fundamentals #BBCA #Learning #Hashesnodes

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