BlockShots: Blockchain Simplified

In this episode, we take a slightly tangential topic to understand how is blockchain technology not just bitcoin. Considering bitcoin came first and later blockchain became popular, let’s get clarity on the two.

The finality of a block means that the majority of the nodes in a blockchain network have verified and accepted that block and their state has been updated accordingly. Finality assures that the transactions included in a block will not become invalid because of any reason.

In this episode, we discuss blockchain forks - what they are and what causes them.

For multiple parties to reach consensus, they must follow some rules. Rules regarding how to decide who would produce blocks and when, the interval between blocks, how big or small the blocks could be, and so on. These rules are together part of the consensus algorithm of the chain.

When some of the nodes decide not to update to the new rules, then a fork happens on the chain. Forks are of two types — soft and hard.

Blockchains are decentralized systems. There is no single point of control or administration. In contrast to other IT systems, there is no admin in a blockchain. Instead, blockchains are governed.

To make updates to the rules of a blockchain, every participant must agree directly or indirectly. Blockchain governance comprises the processes to coordinate this agreement.

In this episode, we understand different ways of doing blockchain governance.

In this episode, we understand types of blockchain networks depending on who can read the state and who can participate in block production (updating the state).

In a permission-less blockchain, anyone can participate in the block production process, while in a permissioned blockchain, only selected nodes can produce blocks.

In a public blockchain, anyone can read the state (data), while in a private blockchain, only the intended users or nodes can read the data.

Blockchains, just by themselves, are a collection of nodes sharing data and agreeing on its state. To make blockchains useful for the end-users, applications are built on top of them. Simply put, applications which use a decentralized backend (like a blockchain), are called Decentralized Applications or DApps.

A simple example of a DApp is software wallet applications that allow the user to query and transfer balance on a blockchain while interacting with a familiar user-interface.

Smart Contracts allow users to extend the business logic of blockchains. Just the transfer of bitcoin and ether might only help with a subset of financial use cases and cryptocurrencies.

For blockchains to be useful in more scenarios, they should be able to execute any kind of business logic and not just transfer of cryptocurrency. This is exactly what smart contracts provide — execution of any kind of business logic on the chain.

In contrast to the physical wallet in which we keep currency notes, a digital or blockchain wallet does not hold digital currency. Instead, the wallet holds the cryptographic keys so that they could be used in a convenient manner.

A more widely accepted definition of a blockchain wallet is a software program or a hardware device that could be used to store cryptographic keys associated with one or more blockchain accounts.

In this episode, we explore wallets and how they work.

Accounts are a way of representing users on the blockchain. Just like we have accounts in banks, generally represented by account numbers, we have accounts in blockchains too. In a blockchain, accounts are generally a representation of a users’ cryptographic public key.

In this episode, we cover accounts and cryptographic keys - public key cryptography and its application in blockchains.

Block Production is the process of proposing and appending new blocks to the blockchain so that the state of the chain could be updated. The state update happens when the transactions included in the blocks are executed on the chain by all the nodes.

In this episode we go into the details of how blocks are produced in blockchains and what is mining.