Blockchain functionality

Through a cryptocurrency view, blockchain consists of stable chain of blocks, each one block stores a list of previously confirmed transactions. Since blockchain network is maintained by a myriad of computers spread around the world, it functions as a decentralised database (or ledger).

Each node keeps a copy of the blockchain data and they can communicate with each other to ensure they are on the same page/ block.

Blockchain transactions occur within peer-to-peer global network and this blockchain is the source for the decentralised digital currency that is: borderless as well as censorship-resistant. Most blockchain systems are also trustless because they don’t require any kind of trust. There is no authority in charge of Bitcoin.

The main part of every blockchain is mining and this relies on converting algorithms into something. Bitcoin uses the SHA-256 algorithm — Secure has algorithm 256 bits. To define this algorithm, it takes an input in any length and generates an output that has the same length. The output produced is called a “hash” and is made up of 64 characters (256 bits).

Same input will result in same output, even if process is repeated another few times. But if there are any small changes made on input, output will be totally different. This concludes that hash are deterministic — it reacts to changes and in cryptocurrency, they are designed as a one-way hash function.

What is a one-way hash function? It is a system where there is no way to turn back to the original state. One can only assume/ predict what the input originally was and even so, the guessing will not mean it is the correct original input and chances are low. This one way hash function is one of the reasons why Bitcoin’s blockchain is secure.


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