Blockchain is one of the lastest buzz words in the tech community. Businesses seem to love it and a whole new branch of blockchain developers has emerged. However, what is the blockchain and how does it work ?
A blockchain is a growing list of records called blocks which are linked and secured using cryptography. Each block is linked cryptographically using the SHA256 hashing algorithm.
| Fields in Block | Block #1 | Block #2 |
|---|---|---|
| Nonce | 0054F | 0044D3 |
| Data | Send 500 to Bob | Send 230 to Ross |
| Previous Hash | 0000 | 034EF |
| Hash | 034EF | 4D56E |
It is all about the Hash
As you can see each block holds various fields including a nonce, data and previous hash. All those fields are passed to a hashing function which returns a new hash. Each hash secures the block. This is possible because a hashing function completes 5 requirements:
- It is one way
- It always yields the same result (deterministic)
- It is fast compute
- It has an avalanche effect (small changes result in big hasing changes)
- It withstands collision (when two hashes overlap)
As you can see, changing a block’s data is nearly impossible because the resulting hash would be very different and thus rejected by the ledger which is immutable. The ledger is what keeps track of the blocks.
Mining and the NONCE
The mining process takes the block’s data and generates a hash for it. Specifically, it has to find the NONCE that matches the target. The NONCE is a field as we saw and it stands for “number used only once”. This means the NONCE is a number and the resulting hash has to match a target. However, it is impossible to predict the outcome because as we saw in the Hashing section, a hashing function is one way. We can’t find the right NONCE unless we try each number one by one until we hit our target.
As you can see, the NONCE takes quite a lot of time and work to discover. Thats why mining rigs are necessary. Finally, the NONCE is used also as the proof of work. Finding the right NONCE takes time but once the NONCE is found it is easy for others to verify that the NONCE is correct. This is because the hasing function is one way and its fast. We simply input the NONCE, hash it and check if the resulting hash matches the target.