Blockchain is all the rage at the moment, and the news media are full of stories claiming that it will create the future.

However, there are few easy-to-understand introductory articles. There is little explanation of exactly what a blockchain is and what makes it special.

Below, I will try to write a best understand blockchain tutorial. After all, it’s not that hard, and the core concept is so simple that it can be explained in a few sentences. I hope by the end of this article you will not only understand blockchain, but also what mining is and why it is getting harder.

To be clear, I’m not an expert in this area. Although I have been interested in blockchain for a long time, I started to understand it carefully from the beginning of this year. Errors and inaccuracies in the article are welcome to be corrected.

First, the nature of blockchain

What is blockchain? In short, it is a special kind of distributed database.

First, the blockchain’s main role is to store information. Any information that needs to be saved can either be written to the blockchain or read from it, so it’s a database.

Second, anyone can set up a server, join the blockchain network and become a node. In the world of blockchain, there is no central node, each node is equal and holds the entire database. You can write/read data to any node, because all the nodes will eventually synchronize, keeping the blockchain consistent.

Second, the biggest characteristics of blockchain

Distributed databases are not new; there are already products on the market. But blockchain has one revolutionary feature.

Blockchain has no administrators, it is completely uncentric. Other databases have administrators, but blockchain does not. If one wanted to add censorship to blockchain, it would not be possible because it is designed to prevent the emergence of a central authority.

It is unmanageable that makes blockchains unmanageable. Otherwise, once the big companies and conglomerates control the management, they will control the platform and all other users will have to do their bidding.

However, without an administrator, anyone can write data into it, so how can you ensure that data is trusted? What if the bad guys changed it? Read on. That’s the magic of blockchain.

Third, block

A blockchain is made up of blocks. A block is much like a database record, in that each time data is written, a block is created.

Each block contains two parts.

  • Head: Records meta information about the current block
  • Body: Actual data

The block header contains multiple meta information about the current block.

  • To generate the time
  • The Hash of the actual data (that is, the block body)
  • Hash of the previous block
  • .

Here, you need to understand what a Hash is, which is necessary to understand blockchain.

A Hash is a computer that can compute an eigenvalue of the same length for anything. The blockchain’s Hash length is 256 bits, which means that whatever the original content is, a 256-bit binary number will be computed at the end. And you can guarantee that if the original content is different, the corresponding Hash will be different.

String, for example, 123 is the Hash a8fdc205a9f19cc1c7507a60c4f01b13d11d7fd0 (hexadecimal), converted to binary is 256, and only 123 can get the Hash.

So there are two important implications.

  • Corollary 1: Each block has a different Hash and can be identified using the Hash.
  • Corollary 2: If the contents of a block change, its Hash must change.

4. The immutability of Hash

There is a one-to-one mapping between a block and a Hash, and the Hash for each block is computed against the “Head”.

As mentioned earlier, the header contains many things, including the Hash of the current block body and the Hash of the previous block. This means that if the contents of the current block change, or the Hash of the previous block changes, the Hash of the current block must change.

This has big implications for blockchain. If someone modifies a block, the block’s Hash changes. In order for subsequent blocks to be connected to it, the person must modify all subsequent blocks at the same time, or the changed block will be removed from the blockchain. For the reasons I’ll mention later, hashing is time-consuming, and modifying multiple blocks at once is almost impossible unless someone has more than 51% of the computing power on the network.

It is through this linkage mechanism that the blockchain ensures its own reliability. Once data is written, it cannot be tampered with. It’s like history. What happened is what happened, and it’s never going to change.

Each block is connected to another block, which is where the name “blockchain” comes from.

Five, mining

Because synchronization between nodes must be ensured, new blocks cannot be added too quickly. Imagine that you have just synchronized a block and are ready to generate another block based on it, but then another block is generated on another node and you have to give up half of the calculation and synchronize again. Because each block can only be followed by one block, you can only ever generate the next block after the latest block. So, you have no choice but to sync as soon as you hear the signal.

So blockchain inventor Satoshi Nakamoto (a pseudonym whose real identity remains unknown) deliberately made it difficult to add new blocks. His design is that, on average, only one new block is created every 10 minutes, or six in an hour.

This output speed is not achieved by command, but by deliberately setting up a large number of calculations. That is, it takes an extremely large amount of computation to get a valid Hash of the current block and add new blocks to the blockchain. We can’t get up fast because we have too much work to do.

The process is called mining, because the difficulty of calculating a valid Hash is like finding a grain of sand in all the sand in the world that fits the bill. The machines that Hash are called mining machines, and the people who operate them are called miners.

Six, the difficulty coefficient

Reading this, you may have a question: People say mining is hard, but mining is just using a computer to Hash out a Hash, which is what computers are good at. How could it be so hard?

It turns out that not just any Hash can be used. Only Hash that meets the criteria will be accepted by the block link. This condition is extremely harsh. Most hashes do not meet the requirements and must be recalculated.

It turns out that the block header contains a difficulty factor, which determines how hard it is to compute the Hash. For example, the difficulty factor for the 100,000th block is 14484.16236122.

The blockchain protocol states that a constant is divided by the difficulty factor to get the target. Obviously, the higher the difficulty, the smaller the target value.

The Hash validity is closely related to the target value. Only Hash values smaller than the target value are valid. Otherwise, the Hash is invalid and must be recalculated. Because the target value is so small, the chances of a Hash smaller than that value are extremely slim, perhaps one in a billion computations. This is the fundamental reason why mining is so slow.

There is also a Nonce value inside the block header, which records the number of Hash recomputations. The 100,000th block has a Nonce value of 274148111, which means it has to be computed 274 million times to get a valid Hash before the block can be added to the blockchain.

Dynamic adjustment of difficulty coefficient

Even if mining is difficult, there is no guarantee that a block can be produced in exactly ten minutes, sometimes in a minute, sometimes in hours. In general, with the improvement of hardware equipment and the increase of the number of mining machines, the computing speed will be faster and faster.

In order to keep the output rate constant at ten minutes, Satoshi nakamoto also designed a dynamic adjustment mechanism for the difficulty coefficient. He stipulated that the difficulty factor should be adjusted every two weeks (2,016 blocks). If blocks are generated at an average rate of 9 minutes over the two weeks, that means they are 10% faster than the legal speed, so the difficulty factor is increased by 10%. If the average build speed is 11 minutes, that means it’s 10% slower than the legal speed, so the difficulty factor should be 10% lower.

The difficulty factor gets higher and higher (the target value gets smaller and smaller), making mining harder and harder.

Bifurcation of blockchain

Even if the blockchain were reliable, there’s still one problem left unsolved: if two people write to the blockchain at the same time, that is, two blocks join at the same time because they’re both attached to the previous block, a fork is formed. Which block should be adopted at this point?

The rule now is that new nodes always adopt the longest blockchain. If a blockchain forks, it will see which branch is behind the fork point, reaching six new blocks first (called “six confirmations”). Based on a 10-minute block calculation, it can be confirmed in an hour.

Since the rate at which new blocks are generated is determined by computing power, the rule says that the branch with the most computing power is the true bitchain.

Nine,

As an unmanaged distributed database, blockchain has been running for eight years since 2009 without major problems. This proves that it works.

But to keep the data reliable, blockchain comes with its own costs. One is efficiency. It takes at least ten minutes for data to be written to the blockchain, and more time is needed when all nodes synchronize data. The second is energy consumption. The generation of blocks requires miners to do countless meaningless calculations, which is very energy consuming.

Therefore, the application scenarios of blockchain are actually very limited.

  1. There is no governing authority that all members trust
  2. The written data does not require real-time use
  3. The benefits of mining cover the costs

If the above conditions are not met, a traditional database is a better solution.

At present, the biggest (and probably only) application scenario of blockchain is the cryptocurrency represented by Bitcoin. In the next article, I will introduce you to the basics of bitcoin.

10. Reference links

  • How does blockchain really work? , by Sean Han
  • Bitcoin mining the hard way: the algorithms, protocols, and bytes, by Ken Shirriff

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