July 10, 2019

Understanding Blockchain Essentials

Shah Wajahat

Internet today is full of the buzz word "Blockchain", but what is Blockchain? and does it really matter to know about blockchain technology?

Did you know?

At an average number, monthly 8 to 200 ICO are held. Today, 14 countries are exploring development of official cryptocurrencies. While 69% banks are already experimenting blockchain Technology. All over $8-12 billion dollars are saved in annual savings due to utilizing blockchain technology. [1]

All of this started in 2008, when a person (or group of people) known by the name Satoshi Nakamoto presented first concept of blockchain. Bitcoin was built using implementation of Nakamoto’s design and concepts. Soon, to revolutionized public ledger for global transactions.

Just like internet revolution, we will experience blockchain’s transformational impact on our lives as well. It will change the way identities are managed, relationships between individuals and states, how data is used and stored. This technology has the ability to deliver more efficiently and securely to common citizens.

What is Blockchain?

Blockchain is a chain of blocks that hold information, these blocks are linked by cryptography. It is a technique which intends to timestamp digital documents so that they are highly secure, verifiable and can't be tampered. Type of data which is stored in these blocks depends upon blockchain and goal it’s trying to perceive.Yes, Blockchain is the ultimate solutions to all of our Privacy and security concerns over the internet. It is growing new technology for a number of reasons.

Blockchain provides:

  • Decentralized solution to Businesses: Without interference of any third party or central governing entity. Blockchain uses a peer-to-peer network, to use distributed and decentralized system instead of making a central entity to control things.
  • Immutable Information Storage: Once any information is fed to a block, it is now a part of blockchain and it cannot be changed or tampered. As all the corresponding blocks with make sure of its authenticity.
  • Cost Effective: Blockchain based solutions are one-time investment on infrastructure of that solution.

All of these blocks are identified with their unique block addresses which are based upon Hash Function. A Hash is simply, a fingerprint or identity expressed in bits. Each of new block created will get a unique Hash function through which, we are able to track that block.

The first block of a chain is called Genesis block. All new coming blocks are linked to the previous blocks. Blockchain pointers are used to point towards address of previous block in a chain.

Benefits of Hash Identity of Blocks

With help of Hash identities, we can have a keen track of:

  1. Changed Data.
  2. Complete history of a block and data.
  3. Secure information which cannot be tampered

Hash is extremely useful in order to keep track of a block. When Hash of a block changes, it will be a member of a new chain and not kept in same block. It is considered as a new entry and treated that way, so the previous data is still in that place and at any point we can retrieve previously stored data.

How Blockchain works?

Understanding, how blockchain works is really simple. First, we need to understand that, each block in a blockchain, blocks have three components:

  1. Hash: fingerprint, Identity of that block.
  2. Data: data stored in that Block
  3. Hash of previous block

Let’s consider an example: Xord.one is a company which is based on blockchain and provides solution for verified certifications on blockchain platform.

Assuming that an attacker is attempting to change the data present in a Block B which contains information about Student A certificate.

Now, the following Block, will know that the Hash address of the previous block is tampered and it will not match to Block C's Hash Address record. Now, the tampered or changed block is not the member of chain he is trying to get in. Block A, and all other blocks also deny the tampered block's authenticity. Hence, once a Block is member of a chain, it is kept highly secured and can't be tampered since all the corresponding block will also keep an eye on Hash Address of each block.

Understand some basic concepts about a Hash function:

  • Hash functions take strings as input and provides a fixed output no what length of string was.
  • Hash functions are efficiently computable.

Why we use Hash Function in blockchain?

Hash functions are used because of these three properties:

  1. Hash functions are collision free.
  2. Any information can be hidden in these hashes with absolutely intractable credibility.
  3. Hash functions are puzzle friendly.

No two Hash functions can have same value, each of information stored will have a new and unique hash function. But since the input can be infinite and output is in fixed length how is Hash function collision free then?

To calculate a collision of Hash this is what you have to do:

  • try 2^130 randomly chosen input strings.
  • there is 99.8% chance then, if you calculate this number of hash inputs then 2 outputs may have same value.

Fun Fact: Even if you have the most advanced computer available and known to mankind today it will take you a lot of time to get till that collision

Wait! Do you understand Nodes in Blockchain? What is a Node? and How Nodes Our Work?

Nodes in Blockchain:

Each computer in a blockchain is called a Node, when someone enters blockchain with his computer he gets a full copy of blockchain.
When a new computer creates a new block, this newly created block is sent to all the other users of the network. This is how each node needs to be verified by the block members to ensure it hasn't been altered or tampered.

All the nodes in a blockchain network create a Consensus. By Consensus, we mean that, all nodes agree to the validity and authenticity of which block are declared valid and what are declared invalid and rejected.

Nodes are responsible to store data of most recent copies of transactions and distribute those copies to other nodes in the network.

How to Tamper or Alter data in Blockchain?

In order to mess up with a blockchain network you have to:

  • Change or tamper all of the blocks in chain and alter all of Hash addresses.
  • You also have to change proof of work for each block.
  • Take over Peer-to-peer network with at least 50% command.

Fortunately, till now, no one has ever been able to do that. Blockchain has never been hacked or altered even after so many expert hackers trying each day to take over it.

Block Time:

The average time taken for a network to generate one extra block in blockchain is called block time.

Blockchains sometime can create a new block in as fast as five seconds. The shorter the block time is, the faster transactions are proceeded.

Why is Blockchain so Popular Technology?

Blockchain is taking over industries with a hype due to its features of decentralization, Security, Immutability and Cost effectiveness and most importantly Building trust.

Decentralized Network:

Blockchains, are distributed networks with no central entity controlling it. Data is stored across many different nodes. Every user can communicate to other user directly on this platform and doesn't require any third part services.

Public Information: 

All the information about each and every activity that is performed on blockchain is Public, anyone no matter where he is can verify the authenticity via blockchain.


In simple words, Consensus means 50% nodes must agree upon validity of a new information before it is added to blockchain. This play great role in securing network and information, ensuring that no data is entered without authenticity and complete record.

 Immutable Data: 

Word immutable means, an object which cannot be changed from the instance, once it is created. Blockchain stores data in such a way that all the information is Immutable and cannot be changed, altered or tampered at any situation.

Privacy and Identity:

People don’t trust third parties, when it comes to reveal their identity and sensitive information. In a survey it was reported that :13% people trust government to use their data appropriately, while 46% don’t.[2]

Blockchain technology will solve the issue of identity theft, privacy and security concerns. Identities and data stored on blockchain networks are less prone to hacks and doesn’t requires someone to get in between matters.


  • Blockchain is a chain of blocks that hold information, these blocks are linked by cryptography. It is a technique which intends to timestamp digital documents so that they are highly secure, verifiable and can't be tampered.
  • Blockchain works on chain of blocks. Each block consists upon Hash Function, record of previous Block and data.
  • If any single block’s data is changed all the corresponding blocks check and verify, which makes it impossible to alter blocks.
  • Blockchain provides decentralization, immunity of data, and cost-effective solution.
  • The first block of a chain is called Genesis block. All new coming blocks are linked to the previous blocks.
  • A Hash is simply, a fingerprint or identity expressed in bits.
  • Hash functions are collusion free, puzzle friendly and data hiding.


[1] Blockchain Infographic: Growth, Use Cases & Facts

[2] Royal Statistical Society, Public Attitudes to the Use and Sharing of Their Data, 3.


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