Blockchain technology is based on the concept of distributed ledger technology (DLT), whose technical foundation is a computer network that follows the peer-to-peer network principle. Solutions for creating and validating consensus rely on cryptographic methods or game theory.
Distributed ledger technology
TLD or Distributed Ledger Technology, also called Distributed Ledger , is a public and decentralized ledger . The content of this ledger usually consists of a concatenation of transaction data that, for example, charges account movements. A network of computers jointly supports data and each node on the network has a copy or replica of this set of data.
Let’s go back to the example:
When Hugo transfers the payment for the hat to Ana with the help of a blockchain application, the transaction is stored in a distributed ledger. From then on, all members of the app can track you.
Digital currencies such as Bitcoin , Ether, Litecoin or Dash are often used in blockchain networks instead of real currencies.
The concept of distributed ledger is based, as has already been said, on peer-to-peer networks (P2P), as they allow communication between computers of the same range. A change in the state of the data will only occur when the participating nodes in the network reach a consensus.
In the peer-to-peer networks of the blockchain development service, digital values are not transmitted directly from network B to network C. Instead, all members — who, in order to interact with the blockchain, require client software that regulates both the consensus process such as data state replication–they have a copy of each data transaction they store anonymously, showing who owns what digital value at what time. When there is a change in the state of the data, each replica of each of the participating nodes is synchronized with the latest version of the blockchain.
But for a change to the database to be accepted, the computers participating in the network must decide by majority vote that the changes are legitimate. That is, only if the majority of the nodes involved accept the changes, all members of the network will have to accept them. If, on the other hand, the majority of the nodes establish that the changes are not legitimate, all the members of the network will reject it. This can happen, for example, when new data contradicts previous replicas of the blockchain. This is why, when one of the nodes wants to make changes to the blockchain deevelopment company, they must prove that they are authorized to do so.
Peer networks (P2P)
Peer networks or peer to peer networks are a network structure in which all participating nodes have the same rights and can, in principle, perform the same functions. The peer principle is different from the client-server model, since in the latter a central server performs administration tasks for several clients. That is, while the server in a client-server architecture is usually managed by an authority (such as a service provider), the peer-to-peer network works without centralized administration.
In the field of blockchain applications, P2P connections guarantee that all participants have access to the jointly managed database of transactions, being able to interact under the same rules. The P2P principle therefore constitutes the basis for the transparent management of data transactions in a blockchain network, although it also faces two challenges: manipulation and the presence of inconsistent data.
Manipulation: if the members of a P2P network pursue different objectives, some of the actors involved could manipulate the functions of the network in their favor.
Inconsistent data: in P2P networks, it has to be guaranteed that the transactions will be executed without fail, completely and (in most cases) only once, all without having a centralized administrative instance.
If we take the aforementioned case as an example, this means that, when Hugo wants to carry out the transaction of a value of 10 euros in its equivalent in electronic currency to be able to buy Ana’s cap, the blockchain development company application used has to guarantee that the amount corresponding will be credited to Ana, but only once.
To avoid data manipulation and guarantee database consistency, the most developed implementations of distributed ledger technology (such as bitcoin or Etherum) use consensus processes and validation. In both consensus processes and anonymous data block concatenation, blockchain technology uses cryptographic hash functions.
Hashing and anonymization processes
Transaction data is stored on blockchain networks as blocks of data that are concatenated using hashes . Each block contains data about different transactions that are recorded anonymously. That is why each participant in the blockchain network can see the transactions that have been made but not who has carried them out.
Consensus and validation procedures
Blockchains are jointly managed in P2P networks by computers that are of equal rank and without a supervisory authority. This requires a consensus mechanism that regulates the conditions under which a new block can be added to the blockchain and when they can be considered legitimate. Among the most common consensus methods are Proof of Work and Proof of Stake .
The most used consensus mechanism is the Proof of Work or PoW , English acronym for Proof of Work of the bep20 token generator. The best known PoW implementation is called Hashcash andIt is a procedure that originally sought to prevent spam in email traffic. Currently, however, the hashcash community is primarily concerned with bitcoin, which uses this consensus procedure to validate the blockchain.
The bitcoin block chain adds a new block every ten minutes, which contains information on all the transactions that the participants have made in that period of time. In bitcoin , mining is used to determine the authorized node in a system of economic incentives: all members of the network receive the same mathematical problem, but only the one whose computer is capable of solving it faster will be able to add a new block, and therefore Of course, get the financial reward, which in the case of bitcoin is a pre-established number of digital currencies.
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