Basic 101

Individual working as a group across the globe on the blockchain. Each with computer plugin into the blockchain.

The Inner Workings of Blockchain

Embracing Decentralization for Power Distribution Across Nodes by Melvin Hoyk.

Individual working as a group across the globe on the blockchain. Each with computer plugin into the blockchain.

Blockchain technology, with its promise of decentralisation, transparency, and security, has revolutionised numerous sectors, from finance and healthcare to the supply chain and education. But how does blockchain work, and what makes it so different from the traditional internet infrastructure? Let’s explore these questions and more.


Centralised Vs. Decentralised Networks
The traditional internet infrastructure operates on a centralised model. Information flows through servers owned by Internet Service Providers (ISPs), tech giants like Google or Amazon, or other third parties. While effective, this system presents potential vulnerabilities, such as single points of failure or misuse of data.

       Unlike traditional systems, blockchain operates on a decentralised model where control isn’t held by a single entity. Instead, the network is maintained by numerous nodes, or computers, participating globally. This means anyone, anywhere with an internet connection can join the network. Consequently, blockchain and its associated cryptocurrencies are not restricted to the rules or economy of any one country. Even if one nation imposes limitations, the activities can continue in other parts of the world. In essence, blockchain is a global, democratised system of digital trust.


The Role of Nodes in a Blockchain Network
Nodes are the lifeline of a blockchain network. Each one holds a copy of the entire blockchain, including all transactions ever made. They follow a consensus protocol to agree on the contents of the blockchain, ensuring no single party can manipulate the data.

       Nodes have a crucial role in the functioning of the blockchain network. They validate transactions and record them onto the blockchain. When a new block is added, all nodes must agree on the validity of the transactions it contains.
       Importantly, a node must be online to perform its functions. If a node goes offline, it will not be able to validate and propagate transactions. However because there are numerous nodes in a network, the system can withstand several nodes going offline without compromising the operation or security of the blockchain.


Who Runs the Nodes?

An assortment of participants run nodes:

    1. Individual enthusiasts who support the technology or philosophy of decentralisation.
    2. Miners and stakers who validate transactions and create new blocks in return for rewards.
    3. Businesses and service providers offering blockchain-related services need up-to-date blockchain data.
    4. Developers and researchers who conduct tests, develop blockchain software, or perform data analysis.
    5. Non-profit foundations and consortiums run nodes to support the network.
    In this decentralised network, each participant has their reasons and benefits for running nodes, reinforcing the network’s resilience and security.


Blockchain and Node.js: A Clarification
One common point of confusion is the difference between blockchain nodes and Node.js. Blockchain nodes are computers maintaining the network, while Node.js is a JavaScript runtime environment used for developing server-side applications. The term “node” in both instances refers to their function as a network node, albeit in entirely different contexts.

Interior of a huge library setup as blockchain metaphor.

The Blockchain Public Library Metaphor

    1. Blockchain as a Library: Imagine the blockchain as a public library that exists everywhere in the world, with many branches spread across a network of computers. 🏛️
    2. Blocks as Books: Each book (block) contains a list of transactions, like a historical record. These books are written in ink – entries are permanent and unalterable. 📚
    3. Nodes as Librarians: Our library wouldn’t function without librarians. Similarly, nodes in the blockchain maintain the system. They have a copy of the entire library (blockchain) and follow the network’s rules. Librarians (nodes) validate new entries (transactions) and add them to new books (blocks). 📖
    4. Chain of Books: The books are arranged chronologically, forming a chain, and each new book added makes the previous ones more secure. 🔗
    5. Immutable Rules: The library has strict rules for borrowing and returning books – these reflect the unchangeable nature of blockchain transactions. 📖

Our public library metaphor simplifies the core features of blockchain technology: decentralisation, immutability, security, and transparency. Think of the blockchain library as always open 24/7, ensuring efficient transactions, with librarians (miners) maintaining order.


Conclusion
Blockchain technology has significantly transformed our perception of secure, transparent, and decentralised transactions. By understanding its inner workings, we can better appreciate its potential and applications. Whether it’s individuals with an interest in decentralisation, businesses leveraging the technology, or developers exploring new possibilities, everyone contributes to maintaining the robust and secure functioning of the blockchain network.
Blockchain technology, while complex, operates on the principles of transparency, security, and decentralisation, making it a revolutionary force in today’s digital world.

Image: a group of people forming a society forming a governance in blockchain called DAO (Decentralised Autonomous Organisation)

Societal Revolution Through Blockchain Empowerment

In our previous piece, “Blockchain Unchained: A Beginner’s Guide”, we dove into the technical aspects of blockchain technology. We deciphered how this revolutionary technology maintains a public ledger of transactions, secured through cryptographic methods, providing an immutable and transparent record. For this article, we are going to shift our lens. We’ll look at how blockchain technology is doing more than just powering cryptocurrencies; it’s reshaping society and empowering individuals and communities.


Blockchain Reshaping Society
Blockchain is more than just a buzzword; it’s a tool that’s restructuring society as we know it. This technology allows for decentralisation and transparency in operations, disrupting traditional systems. For instance, in supply chain management, blockchain can track the journey of a product from the manufacturer to the customer, ensuring transparency and reducing fraud. In healthcare, it can create a secure, unchangeable record of a patient’s history, improving diagnostics and treatment. Furthermore, the incorporation of blockchain into voting systems and Decentralised Autonomous Organizations (DAOs) can lead to tamper-proof, transparent, and more accessible elections, reshaping governance on a global scale. DAOs, which are blockchain-based organizations controlled by their members, offer an exciting example of how this technology can democratise decision-making processes.”


Empowering Individuals and Communities
Beyond revolutionising sectors, blockchain is also about shifting power dynamics. By enabling peer-to-peer interactions, it reduces reliance on centralised institutions, thus giving individuals and communities more control. It facilitates direct transactions between parties anywhere in the world, making cross-border payments swift, secure, and cost-effective. This is particularly valuable for unbanked communities, who gain access to financial services without the need for traditional banks. Blockchain is not just a technological innovation; it’s a tool for economic empowerment and equality.


Looking Ahead
The full potential of blockchain technology is yet to be realised. It’s a rapidly evolving field that promises to bring transformative changes to our society. By understanding its impact and possibilities, we can be better prepared for this future. In the coming era, blockchain could become as integral to our daily lives as the internet is today.


Blockchain technology is much more than a digital ledger for cryptocurrencies. It’s a revolutionary system that can bring about profound changes in various sectors of society, enhancing transparency and empowering individuals and communities. As we continue to explore the potential of this technology, it becomes clear that blockchain’s decentralising influence is set to reshape the contours of our society in unprecedented ways.
      Remember, these shifts won’t happen overnight, and every transformative technology has its share of challenges. As we journey into the future, understanding, adapting, and innovating will be key to navigating the exciting realm of blockchain. – written by Melvin Hoyk.


A group of people standing in front a huge Block which is the Ethereum Blockchain, observing.

Blockchain Unchained: A Beginner’s Guide

Birth of Blockchain

Blockchain, a term that once baffled many, has now become a buzzword in the digital world. Its inception traces back to the emergence of Bitcoin, the first cryptocurrency, in 2009. The anonymous entity known as Satoshi Nakamoto created Bitcoin as a decentralised digital currency, free from control by any government or organisation. The technology underpinning this innovation? Blockchain.

       Fast forward to 2015, and the launch of Ethereum added a new layer to the blockchain narrative. Ethereum introduced smart contracts – self-executing contracts with the terms of the agreement directly written into code. This development unlocked an array of potential applications for blockchain technology, far beyond the realm of cryptocurrencies.

       Now that you know a little about where blockchain came from, let’s delve into what it is and how it works.


What is Blockchain?

Simply put, a blockchain is a type of database. But instead of storing information in a central location, a blockchain distributes data across a network of computers, or nodes, around the world.


From Blocks…

At its core, a blockchain is made up of a series of data units, aptly called “blocks.” Each block contains a list of transactions. Once a block is filled with a certain number of transactions, it’s time to create a new one.


…To Chains

Here’s where the ‘chain’ part comes in: each new block contains a unique code called a “hash,” as well as the hash of the previous block in the chain. These hashes link the blocks together in a specific order, creating a chain of blocks – a blockchain. This chaining mechanism is what makes the blockchain secure and tamper-resistant. If anyone tries to alter a transaction in a block, the hash of the block changes, breaking the chain.


Nodes: The Guardians of the Blockchain

In a blockchain network, several nodes maintain and validate the blockchain. Nodes are computers that hold a copy of the entire blockchain and follow the rules of the network.
When a new block is added to the blockchain, every node in the network updates its blockchain to include the new block. This decentralisation makes the system highly resilient to attacks and fraud.


The Power of Blockchain in Simple Terms

Think of blockchain as a magic notebook. Everyone who participates in a blockchain network has a copy of this notebook. Now, let’s say you want to write a note (or in the real world, make a transaction). Everyone with a copy of the notebook must agree to your note before it’s written. Once written, the note is there forever. It can’t be changed, erased, or manipulated.

       In addition, each new note (transaction) contains a secret code that connects it to the previous note. So, if someone tries to tamper with a note, the codes won’t match up, and the network will know something’s not right.

       That’s the magic of blockchain. It’s a transparent, secure, and decentralised way of keeping notes (or transactions), where everyone is a watcher, and nothing can be altered without everyone’s consent.

       The real world isn’t filled with magic notebooks, but with blockchain, we’re getting close. This technology has the potential to bring about big changes, from how we use money to how we keep records. We’re just starting to scratch the surface of what blockchain can do. Welcome to the start of something magical!

Centralised person (Bank) standing with decentralised blockchain floating in the background.

Decentralisation: Heart of Digital Assets & Future Finance

I. Introduction:

The world of finance is undergoing a monumental shift as it treads towards decentralisation. The rise of digital assets, powered by cutting-edge technologies like blockchain, is at the core of this transformation. But why this shift? To understand, we must first take a journey back in time.


II. The Historical Evolution of Finance:

Finance has evolved significantly throughout history, moving from primitive barter systems to gold and silver coins, paper money, and then to modern banking. Centralised banking, with its regulated structures and gatekeepers, played a crucial role in this evolution. However, like any system, it has its drawbacks.


III. Centralised Banks – The Limitations:

Despite providing a semblance of structure and security, centralised banks often limit access to necessary financial services. Individuals without a bank account, the unbanked or underbanked, face significant hurdles in accessing basic financial services. Additionally, high transaction fees, lack of transparency, and susceptibility to systemic failures are significant drawbacks.


IV. The Advent of Blockchain and Cryptocurrency:

Enter blockchain and cryptocurrencies, two revolutionary technologies promising to address some of these challenges. They offer an alternative financial ecosystem, one that isn’t controlled by a central authority but is instead distributed across a network of computers.


V. Decentralisation – A Paradigm Shift:

At its core, decentralisation is about distributing and delegating authority away from a central body. In finance, this implies that transactions don’t need a central authority like a bank or government to validate them. This fundamental shift empowers individuals, enhances transparency, and increases security while fostering an environment where innovation can thrive. The democratisation of finance through decentralisation potentially allows anyone, anywhere, to access and participate in this new financial landscape.


VI. Ethereum – A Case Study:

Ethereum offers a compelling example of decentralisation’s transformative power. Unlike Bitcoin, Ethereum isn’t just a digital currency. It’s a blockchain-based platform that allows developers to build and deploy decentralised applications (DApps) and create new digital assets. With its smart contract functionality, Ethereum has become the backbone of the Decentralised Finance (DeFi) movement and the birthplace of Non-Fungible Tokens (NFTs), demonstrating the versatile applications of decentralisation.


VII. Risks and Challenges of Decentralisation:

However, it’s crucial to understand that decentralisation isn’t without its challenges. Regulatory hurdles, scalability issues, and security risks are among the significant concerns. Additionally, the lack of a central authority can sometimes lead to disputes that are difficult to resolve. Therefore, while the potential of decentralised finance is immense, navigating these challenges is vital for its long-term success.


VIII. Conclusion:

The shift towards decentralisation in digital assets is a response to the limitations of traditional, centralised finance. By offering increased access, transparency, and a platform for innovation, decentralised systems like Ethereum are challenging the status quo and paving the way for a new, inclusive financial future. However, as with any disruptive technology, the road ahead requires careful navigation of risks and challenges. As we embrace this new financial paradigm, we should strive for balance, fostering the advantages of decentralisation while mitigating its potential pitfalls.