Who will keep the data in the Bitcoin blockchain?
We know that blockchain is important and that it solves something important which is the problem of trust of course on the internet we don’t trust anything and that’s why we need this centralized system if we talk about social media banking everything is centralized now what exactly does centralization mean Android simply means that someone controls It can be a person, it can be an entity, it can be a company, think about banking, the banking system controls all the accounts and all the users and all the users think about social media, it controls your accounts.
Who will keep the data in the Bitcoin blockchain?
What we want to achieve is to move away from a centralized system to a decentralized one but the question is who will hold the data, so let’s say we want to send ten dollars to B Of course blockchain can be implemented for multiple scenarios, one of the first applications of blockchain is Bitcoin so we can transfer Bitcoins as well and we also have Some other applications because we’ll talk about Bitcoin later, so at this point let’s say if we want to send ten dollars to B and as a loan, well, B will return the money with interest, let’s say 11.
So in this case $1 is interest there Now, let’s say A sends that money and who of course manages it up to that point we have the central banking system that will keep the record now we know that in the banking service or requirements maintain that A sent ten dollars to B but what if we don’t have a bank between them who will keep this data.
Bitcoin trading log saves trader data
Now if you say A we will keep the data, we can’t do that right, look at it if the person keeps the data, they can change it of course, I can say I sent you twenty dollars now in this case, the problem is that you can change the data.
Again the issue of trust arises, so what we can do is one of the solutions we can implement here is if they both keep the record now because we can’t trust A and B, even B can be changed to five and can be changed to 20 and we have a problem there, so how We can solve this problem, so basically what you’re trying to do is move away from the client architecture to a peer-to-peer architecture where we have two entities here one of which on the way to solving this problem is having multiple people in the network not just a and b maybe we can get C D E F We have multiple entities.
Now what happens is every time a makes a transaction, that transaction will be recorded not only with A and B but with everyone c d f matter in the future if a says that hate was 20 now everyone in the network knows that it was not 20 it was 10 and now We know that the malicious person here, which is pair B, cannot change it because everyone knows the data.
Is blockchain immutable?
The beauty of blockchain is that it is immutable, which means that once you store data, you cannot change it, so we know that there is a ledger that everyone will maintain correctly. The question now is how you are going to store this data.
Different blockchain implementation has different time limits I’m talking about the first blockchain implementation which is Bitcoin, what you do in Bitcoin is you have a 10-minute window on average, it’s not fixed and we can have seven minutes, eight minutes, 12 minutes, 15 minutes but on average We make it 10 minutes in every 10 minutes of what you do whatever transaction happens during those 10 minutes, it’s going to go into a block, so the ledger goes into a block in one block, and you’re going to get multiple transactions right.
The concept of hashing in blockchain
At this point imagine there is a concept of hashing now what is hashing is imagine someone’s fingerprint, let’s be unique, so every time you save data in a block you have to find a hash for it, so there are certain algorithms for it, we have sha3 which is very famous let’s say We are also using sha here to find the hash of this block now, how do you find the hash, it’s very simple, take all the transactions and find the hash, of course, there is a different algorithm for this we will talk about Mercury later but at this point let’s find the hash of this block and then save this hash In the next block.
Now in the next block, we have multiple transactions, again search for the top but not only with the transaction with the hash as well as the previous block now you will get a new hash now save this hash in the next block with all the transaction you will have a hash of the previous block, find the hash of the block New and this is how you do it.
So what you’re doing is you’re creating a chain here that looks a lot like a directly linked list because you’re storing the address of the other node in the same way that here we’re storing the hash of the previous node, and that’s how you make a Bitcoin chain.
Who is responsible for verifying a transaction in Bitcoin?
If I talk about the Bitcoin network, let’s say a person gets ten dollars for every block they add, and in one block they will make multiple transactions now in real Bitcoin, they will get a huge amount, so let’s say they got about 6.25 Bitcoin, now the price of one Bitcoin is high, You can check it, you will find it is very high I think it is around 20 thousand imagine 20 thousand rupees in 6.25 this is the amount you get for adding a block in the blockchain
And this is also what you do every time every 10 minutes now, these people here we call miners, okay, so in this network, all the other people are nodes, and then the special people here who add the block in the blockchain are called Miner Of course you will have several minutes right if you are getting rewarded for adding a blog, which is a very simple task, everyone wants to do it right, everyone wants to become a Bitcoin miner.
