Beginner’s Guide: How Does Blockchain Technology Work?

A blockchain is a distributed system that consists of a network of computers connected over the Internet that is designed to resist tampering by performing a decentralized approach. There is no central authority that maintains and keeps the record of the ledger. Every computer in the network approves the transactions, but no individual has control over the network. It is challenging to change the data once stored in the Blockchain.

 

Blockchain technology could be used in a plethora of ways, but it was mainly highlighted in2019 when Satoshi Nakamoto adopted it for creating Bitcoin, a digital cryptocurrency.

“Blockchain technology uses hashing.“

 

Hash functions produce a hash. It is a string of numbers and letters. A hash function is a computational function that takes a variable number of characters and converts it into a string with a fixed number of characters. Hash is very sensitive, even a minute change in a string creates an entirely new hash.

 

A blockchain contains a series of blocks, and each block contains three main elements in it.

1. a) Data: Depends on the type of Blockchain, i.e. (Public, Private, and Hybrid blockchain). For instance, Bitcoin technology uses public blockchains which is open-source and contains data of the value/amount of the transaction, a digital signature of the sender as well as the receiver.

 

1. b) Hash of the block: It is always unique like a fingerprint, identifies a block, and it’s content. Once a block is created, its hash has been obtained through a hash function, and then the block is ready to be accepted into the public ledger after the approval of the other participating networks, i.e., miner.

 

1. c) Hash of the previous block: It is known as a temper proof sequence because each entry in the Blockchain depends on the previous one. If someone wants to forge a transaction and generate a new hash of that block, then he has to alter the hash of all the previous transactions in the Blockchain, which is quite an impossible task.

 

Hashing alone is not enough to prevent tampering in blockchain technology. To mitigate tampering, Blockchain uses a “proof-of-work mechanism.”

Proof-of-work: A mathematical algorithm used to confirm transactions and add new blocks to the chain.

 

One can say blockchains secure themselves by using hashing and proof-of-work mechanism. Following are the steps to be followed for a block to be added to a blockchain:

• The transaction information must be stored in a block, i.e., the value of your transaction, a digital signature of the sender, and the receiver.
• Each transaction generates a hash to make it unique from the other blocks.
• The order of the transactions is very important, and each transaction should be entered in the order in which they occurred.
• The block not only contains the hash of the transaction but also has information on the hash of the previous block in the Blockchain.
• Transaction hashes are approved by proof-of-work by the miners to ensure that the transaction is only made by its owner and received by the correct recipient.
• Miners must solve the transaction hash to add the block. If a transaction is approved by a majority of the miners, then the block can be added to the Blockchain.
• Once the block is added to the Blockchain, the information of this transaction will be made public, and anyone within the network can look into this transaction.
• The data can be verified and audited at any given time but cannot be edited.

 

Blockchain Policy

Blockchain policy gives the instruction through a set of plans and actions for the implementation and regulation of Blockchain technology. Blockchain is a distributed and decentralized ledger for recording tamper-proof and transparent transactions. A good blockchain policy can ease several complex problems arising around different industries.

 

Maharashtra Blockchain Policy

Maharashtra has decided to come out with a State Blockchain Policy.’ After Andhra Pradesh, Maharashtra is in line to become the second state in India to introduce blockchain technology into the mainstream. Considering the benefit of technology, it is high time to start investing in blockchain technology in various fields to ensure faster growth in the development of services and organizations.

 

As per CryptoMoonPress, The government of Maharashtra has been working for two years on Blockchain and has already accomplished its first blockchain pilots in the field of the supply chain, documents, and SSC certificates, and healthcare.

 

The state is working on the implementation of Blockchain technology and Artificial Intelligence in different fields, such as Supply chain management, vehicle management, health, and agriculture. Recently, it has launched a Blockchain Sandbox for e-governance. The Blockchain Sandbox has also been selected by the Government of India for startups to test and experiment and then launch it in a live environment in Maharashtra.

 

In the health sector, it would be tested for organ transplantation, and the discussion is going on between the health and the IT ministry to use the Blockchain for the mapping process. The government has chosen Gokuldas Tejpal Hospital of Mumbai for forming nodes of the donors, hospitals, agencies involved, and the health department.

 

The challenge lies ahead is to build the platform and applications which will lay the foundation for Blockchain implementation. As soon as a product is built by a startup, it has to be tested its viability to run in a live environment. Blockchain Sandbox would fulfill the purpose of experimenting with the product in a secure manner.