What
This is an SHARED 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).
1. Decentralization:
- It does not "live" in a single building or on a single company’s
server. The ledger exists simultaneously on thousands of computers
(nodes) globally
2. Transparency and trust: As blockchains are shared and everyone
can see what is on the blockchain, this allows the system to be
transparent.
3. Immutable: Once the data has been written to the blockchain,
it is extremely difficult to change it back.
4. 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.
5. Cost saving: As no third party/bank/intermidiary is required
in the blockchain model.
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.
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.