How Does Blockchain Really Work?

How Blockchain works

This brilliant article was first published by Sean Han at freecodecamp.org

According to Wikipedia, a blockchain is:

A distributed database that is used to maintain a continuously growing list of records, called blocks.

That sounds nice, but how does it work?

To illustrate a blockchain, we will use an open source command-line interface called Blockchain CLI.

I also built a browser-based version of this here.

Installing the Command-Line Interface version

If you haven’t already, install Node.js.

Then run the following in your terminal:

npm install blockchain-cli -g
blockchain

You should see ? Welcome to Blockchain CLI!and a blockchain → prompt ready to take commands.

What does a block look like?

To see your current blockchain, enter blockchain or bc into the command prompt. You should see a block like the image below.

A block on the blockchain
  • Index (Block #): Which block is it? (Genesis block has index 0)
  • Hash: Is the block valid?
  • Previous Hash: Is the previous block valid?
  • Timestamp: When was the block added?
  • Data: What information is stored on the block?
  • Nonce: How many iterations did we go through before we found a valid block?

Genesis Block

Every blockchain will start with the? Genesis Block. As you will see later, each block on the blockchain is dependent on the previous block. So, the Genesis block is needed to mine our first block.

What happens when a new block is mined?

Let’s mine our first block. Enter mine freeCodeCamp♥︎ into the prompt.

The blockchain looks at the latest block on the blockchain for the index and previous hash. In this case Genesis block is the latest block.

  • Index: o+1 = 1
  • Previous Hash: 0000018035a828da0…
  • Timestamp: When the block is added
  • Data: freeCodeCamp❤
  • Hash: ??
  • Nonce: ??

How is the hash calculated?

hash value is a numeric value of a fixed length that uniquely identifies data.

The hash is calculated by taking the index, previous block hash, timestamp, block data, and nonce as input.

CryptoJS.SHA256(index + previousHash + timestamp + data + nonce)

The SHA256 algorithm will calculate a unique hash, given those inputs. The same inputs will always return the same hash.

Did you notice the four leading 0’s in the block hash?

The four leading 0’s is a minimum requirement for a valid hash. The number of leading 0’s required is called difficulty.

function isValidHashDifficulty(hash, difficulty) {
  for (var i = 0, b = hash.length; i < b; i ++) {
      if (hash[i] !== '0') {
          break;
      }
  }
  return i >= difficulty;
}

This is also known as the Proof-of-Work system.

What’s a nonce?

A nonce is a number used to find a valid hash.

let nonce = 0;
let hash;
let input;
while(!isValidHashDifficulty(hash)) {     
  nonce = nonce + 1;
  input = index + previousHash + timestamp + data + nonce;
  hash = CryptoJS.SHA256(input)
}

The nonce iterates until the hash is valid. In our case, a valid hash has at least four leading 0’s. The process of finding a nonce that corresponds to a valid hash is mining.

As the difficulty increases, the number of possible valid hashes decreases.With less possible valid hashes, it takes more processing power to find a valid hash.

Why does this matter?

It matters because it keeps the blockchain immutable.

If we have the following blockchain A → B → C, and someone wants to change data on Block A. This is what happens:

  1. Data changes on Block A.
  2. Block A’s hash changes because data is used to calculate the hash.
  3. Block A becomes invalid because its hash no longer has four leading 0’s.
  4. Block B’s hash changes because Block A’s hash was used to calculate Block B’s hash.
  5. Block B becomes invalid because its hash no longer has four leading 0’s.
  6. Block C’s hash changes because Block B’s hash was used to calculate Block C’s hash.
  7. Block C becomes invalid because its hash no longer has four leading 0’s.

The only way to mutate a block would be to mine the block again, and all the blocks after. Since new blocks are always being added, it’s nearly impossible to mutate the blockchain.

I hope this tutorial was helpful for you!

If you would like to checkout a web version of the demo, head on over to http://blockchaindemo.io

This brilliant article was first published by Sean Han at freecodecamp.org

2017-09-26T01:20:23+00:00

Leave a Reply

avatar
  Subscribe  
Notify of