Blockchain Flashcards

Blockchain, also known as a chain of blocks, is a technology used for storing and transmitting information in a decentralized and secure manner. Data is stored in successive informational blocks, which are chronologically ordered and linked using cryptography. Each block contains a digital hash of the previous block, creating a chain, hence the name blockchain.

The main features of blockchain are:

1. **Decentralization:** Unlike traditional databases, which are stored and managed by a single institution, blockchain distributes its data across many independent nodes (computers), enhancing security and reducing the risk of manipulation or control by a single actor.

2. **Transparency:** Although users can have anonymous or pseudonymous addresses, all transactions recorded on the blockchain are publicly available and can be viewed by anyone. This increases trust and allows for community audits.

3. **Immutability:** Once recorded on the blockchain, information cannot be changed or deleted without a prohibitively high computational effort and the agreement of the majority. This is crucial for maintaining data integrity.

4. **Consensus:** In most blockchains, adding a new block requires the acceptance of the majority of nodes in the network. There are various consensus mechanisms such as Proof of Work (PoW) and Proof of Stake (PoS), which ensure agreement on the state of the network and added information.

5. **Programmability:** Some blockchains, like Ethereum, allow the creation of decentralized applications (dApps) and smart contracts, which automatically execute specific actions when certain conditions are met. This opens up opportunities for automation and new business models.

Blockchain technology has applications in many sectors, from finance and insurance to logistics, healthcare, law, and government administration, offering transparency, security, and efficiency where they are most needed.

Blockchain, which is a chain of blocks, consists of various structural data elements that work together to ensure the security, immutability, and distribution of data. Below are the main structural data elements in a blockchain:

1. **Block**: The basic unit of the blockchain structure that contains a set of transactions. Each block has its unique header and body. The header contains metadata about the block, such as its own hash, the hash of the previous block (which creates the chain of blocks), the timestamp (time stamp), the nonce (a number used only once in the proof of work algorithm), and the target (which defines the difficulty of the task in proof of work).

2. **Transaction**: Represents the transfer of value between addresses in the blockchain network. Each transaction contains information such as the sender's address, the recipient's address, the amount of funds transferred, the transaction fee, and the sender's digital signature which confirms the authenticity of the transaction.

3. **Blockchain**: A continuous chronological chain of blocks containing transactions. Each block is linked to the previous block through a hash, creating a continuous, immutable history of all transactions in the network.

4. **Consensus**: A set of rules and mechanisms that allows all network participants to agree on a single, common state of the blockchain. The most popular methods for achieving consensus are Proof of Work (PoW) and Proof of Stake (PoS).

5. **Address**: A unique identifier that allows receiving and sending transactions in the blockchain. Addresses function similarly to bank accounts in the traditional financial system.

6. **Cryptography**: Asymmetric cryptography is used to create digital signatures that confirm the authenticity and integrity of transaction data in the blockchain. The public key is made publicly available, while the private key is kept secret by the address owner.

All these elements together create a secure and reliable data structure that is difficult to alter, manipulate, or falsify due to the distributed nature of the network and cryptographic mechanisms.

A hashing function in a blockchain is a crucial element of blockchain technology, allowing for data integrity and security. These functions transform arbitrarily large datasets into short, fixed-length, unique strings of characters known as hash digests. Regardless of the input data size, the hash output will always have the same length.

Hash functions have several key properties for blockchain:
1. **Determinism** - the same input data will always generate the same hash.
2. **Irreversibility** - it is impossible to retrieve the original input data from its hash.
3. **Efficiency** - the function can quickly generate a hash from the data.
4. **Collision resistance** - it is practically impossible to find two different inputs that generate the same hash.

In a blockchain, the hash allows for secure and efficient linking of blocks in the chain because each block contains the hash of the previous block, thus ensuring immutability and protecting against tampering. Here's an example of what a hashing function might look like in JavaScript, using the SHA-256 algorithm from the 'crypto' library:

If anyone tries to change the data in any block, the hash of that block will also change, causing a mismatch with the other blocks in the chain, which is easy to detect and prevents the falsification of the transaction history.

The Genesis Block, also known as Block 0, is the first block in any blockchain. In the case of Bitcoin, the Genesis Block was created by Bitcoin's creator, Satoshi Nakamoto, on January 3, 2009. It contains a single transaction, called a coinbase transaction, which awards the first 50 bitcoins to an address belonging to Satoshi Nakamoto. The message embedded in the Genesis Block also has symbolic and political significance: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," which can be interpreted as information about a potential financial bailout for banks, serving as a critique of the contemporary financial system and introducing one of the core elements of Bitcoin's ideology – the need for decentralization.

The Genesis Block lays the foundation for the rest of the blockchain. Each subsequent block in the network references the previous block, creating an unbroken, chronological chain. This means that changing the Genesis Block would require altering the entire following chain, ensuring the security and immutability of the blockchain.

The Genesis Block is important not only from a technical perspective but also as a symbol of the beginning of a new era of digital currency and decentralization.