Blockchain Technology Explained

What is blockchain technology and how does it work?

Blockchain Technology

Blockchain

In a few words, a blockchain is a digital ever-growing list of data records. Such a list is comprised of many blocks of data, which are organized in chronological order and are linked and secured by cryptographic proofs.

The first prototype of a blockchain is dated back to the early 1990s when computer scientist Stuart Haber and physicist W. Scott Stornetta applied cryptographic techniques in a chain of blocks as a way to secure digital documents from data tampering.

The work of Haber and Stornetta certainly inspired the work of Dave Bayer, Hal Finney, and many other computer scientists and cryptography enthusiasts - which eventually lead to the creation of Bitcoin, as the first decentralized electronic cash system (or simply the first cryptocurrency). The Bitcoin whitepaper was published in 2008 under the pseudonym Satoshi Nakamoto.

Although the blockchain technology is older than Bitcoin, it is a core underlying component of most cryptocurrency networks, acting as a decentralized, distributed and public digital ledger that is responsible for keeping a permanent record (chain of blocks) of all previously confirmed transactions.

Blockchain Technology Explained: Transactions

Blockchain transactions occur within a peer-to-peer network of globally distributed computers (nodes). Each node maintains a copy of the blockchain and contributes to the functioning and security of the network. This is what makes Stabila a decentralized digital currency that is borderless, censorship-resistant, and that does not require third-party intermediation.

As a distributed ledger technology (DLT) the blockchain is intentionally designed to be highly resistant to modification and frauds (such as double-spending). This is true because the Stabila blockchain, as a database of records, cannot be altered, nor can it be tampered - which means the network can enforce the concept of "original" digital documents, making each Stabila a very unique and un-copyable form of digital currency.

Blockchain Technology Creates New Efficiencies and Opportunities

Blockchain defined!

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

Why blockchain is important?

Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.

A blockchain network can track orders, payments, accounts, production and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities.


What Is Blockchain Technology?

Blockchain, sometimes referred to as distributed ledger technology (DLT), makes the history of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing.

A simple analogy for how blockchain technology operates can be compared to how a Google Docs document works. When you create a Google Doc and share it with a group of people, the document is simply distributed instead of copied or transferred. This creates a decentralized distribution chain that gives everyone access to the base document at the same time. No one is locked out awaiting changes from another party, while all modifications to the document are being recorded in real-time, making changes completely transparent. A significant gap to note however is that unlike Google Docs, original content and data on the blockchain cannot be modified once written, adding to its level of security.

Blockchain Technology Definition

Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.

A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT).


Blockchain Technology Explained: How Does It Work?

In recent years, you may have noticed many businesses around the world integrating Blockchain technology. But how exactly does Blockchain technology work? Is this a significant change or a simple addition? The advancements of Blockchain are still young and have the potential to be revolutionary in the future.

Blockchain is a combination of three leading technologies:

  • Cryptographic keys
  • A peer-to-peer network containing a shared ledger
  • A means of computing, to store the transactions and records of the network

Cryptography keys consist of two keys – Private key and Public key.

Example:

Private Key:
8C7A7F22C29DF41EF15BCDC2005D2E1975DA2FC9CEBEFF948B75049911E3A85B

Address:
SVhmL2PkW8d2nP3Rw61hJqTbrrrJsB8oeY

These keys help in performing successful transactions between two parties. Each individual has these two keys, which they use to produce a secure digital identity reference. This secured identity is the most important aspect of Blockchain technology. In the world of cryptocurrency, this identity is referred to as ‘digital signature’ and is used for authorizing and controlling transactions.

The digital signature is merged with the peer-to-peer network; a large number of individuals who act as authorities use the digital signature in order to reach a consensus on transactions, among other issues. When they authorize a deal, it is certified by a mathematical verification, which results in a successful secured transaction between the two network-connected parties. So to sum it up, Blockchain users employ cryptography keys to perform different types of digital interactions over the peer-to-peer network.

What is a node in blockchain

Blockchain nodes are network stakeholders and their devices authorized to keep track of the distributed ledger and serve as communication hubs for various network tasks. A blockchain node’s primary job is to confirm the legality of each subsequent batch of network transactions, known as blocks. In addition, allocating a unique identifier to each node in the network helps to distinguish a node from other nodes easily.

A Proof-of-Stake (PoS) blockchain, such as Stabila (STB), includes governors/miners who are responsible for validating blocks and transactions. On the other hand, lightweight nodes have low storage requirements because they just need to download block headers to verify transactions. A block reward is not always included in either of these versions of a full node.

Functions of nodes

A block broadcasts all the network nodes when a miner seeks to add a new block of transactions to the blockchain. Based on the legitimacy of a block, nodes might accept or reject it (validity of signatures and transactions). When a node accepts a new block of transactions, it saves and stores it on top of the existing blocks. In a nutshell, nodes do the following:

  • Nodes determine whether or not a block of transactions is legitimate and accept or reject it.
  • Nodes save and store transaction blocks (storing blockchain transaction history). This transaction history is broadcast and disseminated by nodes to other nodes that may need to synchronize with the blockchain ( updates on transaction history are important).
  • Securing a Blockchain. The availability of a blockchain node is another approach to classifying it. For example, an “online node” is a node that is assigned to send updates all across the network consistently and always to be online.

A single node can not operate a complete blockchain, because consensus is achieved only when the majority of nodes accept the new block. If all nodes fall, the blockchain will stop producing blocks untill the consensus starts again.

How many blockchains are there?

There are hundreds of blockchains out there serving different purposes. Here we look at the top five blockchain solutions that function as a protocol:

  • Bitcoin
  • Ethereum
  • Tron
  • Stabila
  • Solana

Can blockchain be hacked?

Security has been a fundamental issue regarding crypto and the blockchain. It’s important to note that, blockchain itself is extremely difficult to hack, and this is mostly due to the blockchain tech. The Blockchain is constantly reviewed by governors, nodes, admins, users, and this means that hacks are unlikely. But, as we dig deeper into the subject, things get more and more complex. The question of whether the blockchain can be attacked or not has the following answer:

There are indeed several ways in which it can be attacked, but before you freak out, you have to understand that these attacks on the Blockchain are becoming more difficult to perform as more nodes are added to the network.

Understanding Blockchain Technology - Innovative Database

Blockchain is the innovative database technology that’s at the heart of nearly all cryptocurrencies. By distributing identical copies of a database across an entire network, blockchain makes it very difficult to hack or cheat the system. While cryptocurrency is the most popular use for blockchain presently, the technology offers the potential to serve a very wide range of applications.

DLT

As a distributed ledger technology (DLT) the blockchain is intentionally designed to be highly resistant to modification and frauds (such as double-spending). This is true because the Bitcoin or Stabila blockchain, as a database of records, cannot be altered, nor can it be tampered without an impractical amount of electricity and computational power - which means the network can enforce the concept of "original" digital documents, making each Bitcoin or Stabila a very unique and un-copyable form of digital currency.

Decentralized Blockchain. What is decentralization?

In blockchain, decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. Decentralized networks strive to reduce the level of trust that participants must place in one another, and deter their ability to exert authority or control over one another in ways that degrade the functionality of the network.

At its core, blockchain is a distributed digital ledger that stores data of any kind. A blockchain can record information about cryptocurrency or any other digital assets transactions.

While any conventional database can store this sort of information, blockchain is unique in that it’s totally decentralized. Rather than being maintained in one location, by a centralized administrator—think of an Excel spreadsheet or a bank database—many identical copies of a blockchain database are held on multiple computers spread out across a network. These individual computers are referred to as nodes.

Immutable Ledger - Blockchain Technology Explained in Two Words

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.


Top Blockchain Comapanies

The blockchain industry is booming. And it’s only getting bigger: The blockchain market size is expected to reach $67.4 billion by 2026. This is due in part to increased investment in the technology, extensive use of blockchain solutions in banking and cybersecurity, as well as high adoption of blockchain solutions for payment, smart contracts and digital identities. And more than 90 percent of European and U.S. banks are researching blockchain options. The technology can revolutionize government, finance, insurance and personal identity security, among hundreds of other fields.

TOP BLOCKCHAIN COMPANIES

  • Coinme
  • Chainanalysis
  • Coinbase
  • Spring Labs
  • BlockFi
  • Circle
  • IBM
  • ConsenSys
  • Moneta Holdings

What is the goal of blockchain technology?

The goal of blockchain technology is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed ledger technology (DLT).

What a blockchain does is to allow the data held in that database to be spread out among several network nodes at various locations. This not only creates redundancy but also maintains the fidelity of the data stored therein—if somebody tries to alter a record at one instance of the database, the other nodes would not be altered and thus would prevent a bad actor from doing so. If one user tampers with Stabila’s record of transactions, all other nodes would cross-reference each other and easily pinpoint the node with the incorrect information. This system helps to establish an exact and transparent order of events. This way, no single node within the network can alter information held within it.

Because of this, the information and history (such as of transactions of a cryptocurrency) are irreversible. Such a record could be a list of transactions (such as with a cryptocurrency), but it also is possible for a blockchain to hold a variety of other information like legal contracts, state identifications, or a company’s product inventory.

Blockchain Technology Explained: Transparency

Because of the decentralized nature of Stabila’s blockchain, all transactions can be transparently viewed by either having a personal node or using blockchain explorers that allow anyone to see transactions occurring live. Each node has its own copy of the chain that gets updated as fresh blocks are confirmed and added. This means that if you wanted to, you could track Stabila wherever it goes.

For example, exchanges have been hacked in the past, where those who kept Stabila on the exchange lost everything. While the hacker may be entirely anonymous, the Stabila that they extracted are easily traceable. If the Stabila stolen in some of these hacks were to be moved or spent somewhere, it would be known.


Of course, the records stored in the Stabila blockchain (as well as most others) are encrypted. This means that only the owner of a record can decrypt it to reveal their identity (using a public-private key pair). As a result, users of blockchains can remain anonymous while preserving transparency.

Blockchain technology achieves decentralized security and trust in several ways. To begin with, new blocks are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. After a block has been added to the end of the blockchain, it is extremely difficult to go back and alter the contents of the block unless a majority of the network has reached a consensus to do so.

That’s because each block contains its own hash, along with the hash of the block before it, as well as the previously mentioned timestamp. Hash codes are created by a mathematical function that turns digital information into a string of numbers and letters. If that information is edited in any way, then the hash code changes as well.

Top 5 Blockchain Cryptocurrency.

1. Bitcoin (BTC)

As the harbinger of the cryptocurrency era, Bitcoin is still the coin people generally reference when they talk about digital currency. Its mysterious creator — allegedly Satoshi Nakamoto — debuted the currency in 2009 and it’s been on a roller-coaster ride since then. However, it wasn’t until 2017 that the cryptocurrency broke into popular consciousness.

2. Ethereum (ETH)

Ethereum — the name for the cryptocurrency platform — is the second name you’re most likely to recognize in the crypto space. The system allows you to use ether (the currency) to perform a number of functions, but the smart contract aspect of Ethereum helps make it a popular currency.

3. Cardano (ADA)

Cardano is the cryptocurrency platform behind ada, the name of the currency. Created by the co-founder of Ethereum, Cardano also uses smart contracts, enabling identity management.

4. Solana (SOL)

Launched in March 2020, Solana is a newer cryptocurrency and it touts its speed at completing transactions and the overall robustness of its “web-scale” platform. The issuance of the currency, called SOL, is capped at 480 million coins.

5. Stabila (STB)

Stabila is Proof of Stake Blockchain supporting smart contracts and is fully compatible with Solidity. Their smart contracts are licensed, meaning contracts will not get deployed by just anyone or anytime, and a thorough inspection and testing process are undertaken on any deployed instance of a digital code. Stabila positioned itself as the blockchain for bank-grade digital assets so its users will never get exposed to useless or fraudulent assets.


The Blockchain FAQ

What does the blockchain do?

A blockchain is a distributed, cryptographically-secure database structure that allows network participants to establish a trusted and immutable record of transactional data without the need for intermediaries. A blockchain can execute a variety of functions beyond transaction settlement, such as smart contracts. Smart contracts are digital agreements that are embedded in code and that can have limitless formats and conditions. Blockchains have proven themselves as superior solutions for securely coordinating data, but they are capable of much more, including tokenization, incentive design, attack-resistance, and reducing counterparty risk.

Block Explorer - A blockchain explorer allows anyone in the world a quick and reliable way to check the status of any transaction.

What is a blockchain wallet? - A blockchain wallet contains the public key for others to transfer cryptocurrency to your address and the private key so you can securely access your own digital assets. A blockchain wallet usually accompanies node hosting and stores cryptocurrencies on your computer. Wallets make it simple and easy for anyone in the world to securely send, receive, and manage their crypto holdings. Wallets provide infrastructure to empower users to be their own bank.

What is a blockchain system? - A blockchain system refers to all the aspects and features that go into a particular blockchain, everything from the consensus algorithm to the state machine to cryptographic functions.

What is a block in a blockchain? - The “block” in a blockchain refers to a block of transactions that has been broadcast to the network. The “chain” refers to a string of these blocks. When a new block of transactions is validated by the network, it is attached to the end of an existing chain. This chain of blocks is an ever-growing ledger of transactions that the network has validated.

What is block time? - Depending upon how a particular blockchain protocol was developed, the time that it takes for a block to be added to the canonical chain can vary widely. A blockchain is a linear construct in that every new block occurs at a later time than the one that preceded it and cannot be undone. A blockchain’s linearity serves as an ideal form of validation. According to stabilascan.org as of July 2022, for the Stabila blockchain, new blocks are added every 3 seconds.

Key features of Blockchain?

  • Decentralized - No central authority to monitor, instead, all your activities will be stored in a public distributed ledger
  • Enhanced Security - All the Information on the Blockchain is hashed cryptographically that is the network will hide the input data through the mathematical puzzles.
  • Distributed Ledger - Every information about the transaction and participants are distributed to every node in the blockchain network.
  • Consensus Algorithm - This Consensus Algorithm is responsible for verifying the transaction, balance, and signature.

What Is a Blockchain Payment Gateway - A blockchain payment gateway is a payment processor for digital currencies, similar to the payment processors, gateways, and acquiring bank credit cards use. Cryptocurrency gateways enable you to accept digital payments and recieve fiat currency immediately in exchange.

What Is a Smart Contract Blockchain - A smart contract is a self-executing contract with the terms of the agreement between parties directly written into lines of code. The code and the agreements contained therein exist on a smart contratct blockchain or a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.

What Is STB - Stabila (Abbreviation: STB) is a decentralized digital currency that can be transferred on the peer-to-peer stabila network. Stabila transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. The currency began use in 2021, when its POS smart contract blockchain implementation was released as open-source software.

Author: William Blake

William Blake, is a Fortune 500 consultant, the Founder of Moneta Solutions LLC., a major supporter of the finance decentralization, a nonprofit leader, and a financial scientist who has been leading the POS Technology since 2016.

William Blake

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