Cryptocurrency might be a huge factor for our economy in the future and it is important to learn about it. Whether you want to invest in crypto, or just find out more things, you should start by understanding the technology behind it.
Blockchain technology is mostly known, thanks to Bitcoin. It was created by Satoshi Nakamoto and blockchain is an essential part for it. However, nowadays, the word “blockchain” is used to describe the entire Blockchain technology.
A distributed ledger is also how a blockchain is known. This distributed database registers information blocks and they are inter-weaved so that the retrieval of information becomes easier.
To describe this entire process briefly, the transaction starts when one persons decided to send money to another. This transaction is represented as a block in the network. Then, this block goes to all parts of the Network, until all the parts approve the validity of the transaction. After this process is complete, the block is added to the chain, and the money reaches the other person. You can always learn more about this from sources such as Bitmoneynews.com.
How do the information blocks work?
The information blocks are linked by hash pointers. These connect the block with the previous one. All blocks are connected this way, back to the Genesis block. All blocks contain information, a blockchain of blocks has data related to the transactions in a certain period, as well as the has pointer of the previous block and a nonce, a unique arbitrary number.
What is the use of the hash pointer?
The cryptographic hash is the form in which information is stored in each block. This way, no one can ever recreate the input data, but it is very simple to verify it. In the case of Bitcoin, the SHA-256 cryptographic hash function is used, which means that hash pointers have the fixed size of 256 bit.
Any function that can be used to map data to a fixed-size is a hash function. This function generates values which are known as hash codes, has or simply hash values.
The data appears in every block from the chain of blocks in a cryptographic structure. This is called the Tree Merkle, and the name comes from the person who invented it, Ralph Merkle. A hash is generated for each block of data by the structure, and the blocks are grouped in pairs.
The hashes which are generated are regrouped in pairs and then a new has is generated. That one is also grouped with another and this is repeated way up the tree in order to reach a single block. That block is known as the root of the tree, and it is called root hash pointer.
What is a nonce?
The term nonce is used in order to describe a value that can be used only once. This is a unique number and it is randomly issued by the miners, through the PoW. This is used in order to authenticate the current block so that information cannot be reused or changed.
The expansion of Bitcoin is happening here and now. Learn as much as you can to make your own decisions.