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What is Blockchain, Mining, Hash?

by | Dec 21, 2018

In our daily life, we use different types of services from different third party (Banks, Notaries, Internet platforms). There is always a lack of consensus toward this last in terms of reliability or legitimacy. Is it possible to trust each other without a third party? Is the blockchain an opportunity?

New technologies have permitted to individuals to communicate and organize themselves without the need of a third party. But when an exchange include a transfer of value, we need someone of confidence.

We need to pass through a bank to transfert cash, or notary to hand over a property. The supervisation of this middle man of confidence is not without any risk. That is why we gradually lost confidence in our institutions. Today the blockchain offer an innovative alternative to the actual schema, permitting to resolve inner problems related to the trust of third party.

What is a Blockchain?

Blockchain

A blockchain is a distributed database whose informations send by users, are verified and grouped in regular interval of time in block, link and secured through the use of cryptography by forming chains.

Otherwise, it is a computer system allowing to register chronologically, in an indelibly manner transactions between partners. It is a transparent register of all the transactions made since the start of the system that everyone can consult without making any change to the scripture (no write permission because protected by the storage node). This register is constituted of blocks made of hundred of transactions which are added together forming a chain, that is why the term blockchain.

The transactions can be of different nature. It is possible to register an exchange of assets or an electronic contract.

History of blockchain:

It is after observing the crisis of subprimes in usa from july 2007 that the japanese Satoshi nakamoto though of a system that will permit to people to exchange currency without passing through a bank. In January 2009, he created the Bitcoin whose main principles are:

  • It is a free software (a software free of use, modification, duplication that is freely distributed).
  • It is a participative software (Everyone can contribute not only to the running but also to improve algorithms).
  • It is a decentralized system (It is not passing through a third party).

It is also a currency with three constraints:

  • The possibility to be transfer from one person to another.
  • The insurance that the same transaction can’t be made more than once.
  • Confidence.

Face to this three constraints, he comes with three solutions:

  • The use of peer-to-peer (P2P) for the transfer from a third party to another. (A peer-to-peer network is a network which permit to computers to communicate with each other without passing through a central server, each client is also a server)
  • To make sure that the same transaction can’t made more than once, he had the idea to record each of them in a public share register, distributed in a way that everyone can verify that the transaction is unique: This is blockchain.
  • At last to guarantee confidence, he develops techniques of mining (which consist to control and validate all transactions register in blockchain).

In creating this system, he created the first blockchain, the bitcoin blockchain. Since 2009, Bitcoin cryptocurrency has been capitalized at more than US $ 141.4 billion, the value of a bitcoin has risen from a few cents to more than US $ 13000 (in 2018).

What is mining?

Technology

The operation of mining consist of assembling transactions in « blocks », by joining a header indicating the version of the block, the size, the number of transactions registered, the date and time, a number of control (« hash ») forbidding any transaction of the block and serving equally as unique identifier of the block, as for the identifier of the previous block.

Miners are individuals or enterprises which put at disposal the power of their computer to make calculus necessary to the functioning of the blockchain. They include in the block that they constitute a particular transaction which credit them with a certain quantity of crypto currency created for this effect (it is the only moment when cryptocurrency is generated in the system), and integrate fees specific to this transactions. This remuneration will be effective only if the block is definitively accepted in the block chain by the other nodes. It is this creation of currency that explain the use of term « Mining », as for the exploitation of gold in mines.

Once a block of transaction is verified and validated by many computers on the network, it is registered on each computer in the network. If you want for example corrupt the register (blockchain), you will have to corrupt the register on all computer of the network. That is impossible ! hence the trust.

What is a HASH?

Hash

A Hash is a combination of figures and letters, generated by a computer algorithm intended to represent data (which are generally a file or text). It is the unique address of a data.

For example, each time you make a payment in cryptocurrency, you receive a hash in your wallet. It is the hash of the transaction in the blockchain and a prove that it has taken place.

Address after Hash

The hash represent the electronique signature (mark) of data.
If you encounter for example problems with a transaction on a platform, the technical service may ask you to furnish the hash of the transaction to find out your payment and solve the problem.

Revolution?

The experts say that the blockchain will become to transactions what internet have brought as revolution to information. It generate confidence and security necessary to computerize execution of smart contracts without the need of a third party.

Honduras has decided to put in place public digital register (cadastre) lean on the blockchain.

Ghana has started through the NGO African bitland – A simple address = a proprietary title.

The school of engineers leonard-de-vinci(ESILV), based in france, has decided to certify certificates on blockchain, following the example of the Holberton school in USA.

Some works as Bankers or notaries could disappear?

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