Blockchain

What is a blockchain?

• list of transactions that anyone can view and verify (distributed & immutable ledger)
• removes the need for a centralized entity
• secured via blockchain networks
• advantages: global, private, open
• secured by large peer-to-peer network of computers running foss
• addresses made up of public key and private key
• sending money requires signing a transaction with priv key

blocks

• magic number - some sort of identifier

• blocksize - size limit of block

• block header - information about the block

• transaction counter - number of transactions

• transactions - list of transactions in a block

• block header

  • version - crypto version
  • previous block hash - hash of the previous block header (ensures nothing has been tampered with)
  • hash merkle root - hash of transactions in merkle tree of current block
  • time - timestamp to place block
  • bits - difficulty rating of the target hash aka how hard it is to solve the nonce
  • nonce - encryped number that miner has to solve to verify block

consensus mechanisms

• pow
• pos

hashing: mathematical function that converts an input of arbitrary length into an encrypted output of a fixed length // unique hash will always be the same size // hash functions are also one way (cant be reverse engineered) // deterministic(?) - the same hash will produce the same output for the same input

• solving hash starts w data in the block header
• miner focuses on nonce - appended to hashed contents of prev block, then hashed
• when new hash <= target hash then accepted as solution -> reward given -> block added
• bitcoin uses sha-256
• target hash starts with long string of zeroes
• miners generate a hash below target by altering the input by adding an integer (nonce)
• valid hash found -> broadcast to network

cryptographic hash functions

• collision-free - no two input hashes map to the same output hash
• hidden - difficult to guess input value for hash fx from output
• puzzle friendly - selection of input from wide distribution

prevention of double spending

• overcome by maintaining a common, universal ledger system
• recognized as invalid by confirmation process(?)
• if both transactions are pulled from the pool simultaneously, the transcation with highest no. of confirmations will be included in the blockchain and the other will be discarded
• some issues: assumption of invalid tx(?) some people wait for at least 6 confirmations before safely assuming the tx is valid
• 51% attack - reverse the blockchain and create a separate blockchai

51% attacks