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What is Blockchain? [Cryptography, Consensus Algorithms, Peer to Peer, Decentralized Ledger]

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What is Blockchain?

A blockchain is a data structure in the form of a linked list (chain) of unique blocks.

To learn more about blockchains, we recommend these videos.

Blockchain Features

Now we introduce features of Blockchain as follows.

  • Cryptography
  • Consensus Algorithms
  • Peer to Peer (P2P)
  • Distributed Ledger Technology (DLT)

Cryptography

On of the cryptography used in blockchain is public-key cryptography.

Public-key cryptography is a cryptosystem that uses separate keys (procedures) for encryption and decryption, and makes the encryption key publicly available.

The keys used in public-key cryptography are called the public key and the encryption key (private key).

The public key and private key are strings of random alphanumeric characters.

The following videos show public-key cryptography.

In a blockchain, there is a seed phrase (recovery phrase), which is the conversion of a private key into a sequence of multiple English words.

Since private keys can be generated from seed phrases (recovery phrases), be careful when handling them!

If you would like to know more about hardware and software wallets using private keys, please click the following.

Hardware Wallet Software Wallet
Recommended Hardware and Software Wallets for Cryptocurrency

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Consensus Algorithms

A consensus algorithm is an algorithm that takes consensus when updating a blockchain.

Examples of consensus algorithms include the following.

Proof-of-Work (PoW)

Proof-of-Stake (PoS)

Nominated Proof-of-Stake (NPoS)

Delegated-Proof-of Stake (DPoS)

Proof-of-Authority (PoA)

Proof-of-History (PoH)

Proof-of-Weight (PoWeight)

Explain Proof-of-Weight (PoWeight) from 6:12 of the following video.

Proof-of-Burn (PoB)

Proof-of-Activity (PoA)

Proof-of-Capacity (PoC) / Proof-of-Space (PoS)

Proof-of-Importance (PoI)

Explain Proof-of-Importance (PoI) from 5:18 of the following video.

Practical Byzantine Fault Tolerance (PBFT)

Federated Byzantine Agreement (FBA)

Delegated Byzantine Fault Tolerance (DBFT)

HotStuff: BFT Consensus in the Lens of Blockchain

Peer to Peer (P2P)

Peer to Peer (P2P) is an architecture for communication between multiple computers and is a communication method characterized by communication between equals.

Blockchain is realized using P2P.

P2P is not the first blockchain technology, and has been in use for quite some time.

For example, Winny, a P2P file sharing software, was developed and widely used in 2002.

This is a video explaining P2P.

Distributed Ledger Technology (DLT)

Distributed Ledger Technology (DLT) is a digital database that is agreed upon to be replicated, shared, and synchronized across geographically different regions and countries.

Unlike centralized databases such as MySQL, distributed ledgers are characterized by the fact that there is no central administrator.

A consensus algorithm is needed to agree with the P2P network to perform data replication across the nodes of a distributed ledger.

Another example of a distributed ledger is a blockchain system, which can be public (e.g. Bitcoin, Ethereum) or private (e.g. Hyperledger Fabric).

This is a video explaining DLT.

Summary

We introduced blockchain and its features: cryptography, consensus algorithms, P2P, and DLT.

Now that you understand blockchain concepts, let's have some fun with cryptocurrency!

Open your account on our recommended cryptocurrency exchanges!

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