This is an immutable(no changable) append-only distributed ledger that
is updateable only via consensus/agreement among peers.
There is no single authority of this ledger.
This is a Peer to Peer network running over TCP. Same as HTTP, FTP over
TCP.
Examples of blockchains: Tezos (Uses Proof of Stake), Bitcoin (Uses
Proof of Work).
Why learn blockchain?
Decentralization: No need for a trusted third party or
intermediary to validate transactions; instead a consensus mechanism is
used to agree on the validity of transactions. Transparency and trust: As blockchains are shared and everyone
can see what is on the blockchain, this allows the system to be
transparent and as a result trust is established. Immutable: Once the data has been written to the blockchain, it
is extremely difficult to change it back. High availability: As the system is based on thousands of nodes
in a peer-to-peer network, and the data is replicated and updated on
each and every node. Highly Secure: All transactions on a blockchain are
cryptographically secured and provide integrity. Cost saving: As no third party is required in the blockchain
model.
Limitations of Blockchain
Denial-of-Service Attack: An attacker can overload a node by
sending a lot of data or Huge block or transactions which too long to
execute. How to mitigate? bitcoin & many cryptocurrencies have a maximum
possible block size limit. Scalability: Very few nodes can maitain complete blockchain
because of its big size. Regulation Relatively immature technology Sybil Attack: A single person controls few nodes and persuades
few other nodes to block user(bob) from the network completely. This can
result in transaction censoring for user(bob). This can result in double
spending. How to Avoid? look for nodes with suspiciously-low hashrate.
How bitcoin can be issued?
1. Using crypto exchange: Here if someone sells the bitcoin, its
purchased by other
2. Mining: Miners are rewarded transaction fee + Bitcoins. Once a miner
verifies a transaction and adds to blockchain.
Rate of bitcoin Issuance? 2012: 25 bitcoins/block. ie on
verification of 1 transaction, adding to blockchain. 25 bitcoins
2016: 12.5
2140: 0. (All 21 million bitcoin will be issued). Miners will be
rewarded solely through the transaction fees. Why only 21Million bitcoins. Inflation?
The finite and diminishing issuance creates a fixed monetary supply that
resists inflation.