Blockchaintecnhnology: How does it work? BlockchaincomponentsThe basic components ofthe blockchain are:- The nodes which are the partecipants ofthe blockchain and are physically their servers.- The transactions which are the data thatneeds to be exchanged, verified, approved and registered- The block which represents a certainnumber of transactions – Ledger where the transactions areregistred with transparency in a chronological order. It is composed by theblockes related thanks to the hash function- Hash that is essentialy a digitalfingerprint of some data and identifies in a unique way each blockEach block containsdifferent transactions and a hash situated in the header. The hash contains allthe information relative to the block and a hash with the information of theprevious block which allows to create a chain and keep the blocks together.
The transaction contains information on the recipient’spublic address, the characteristics of the transaction and the cryptographicsignature that guarantees the security and authenticity of the transaction. Transactions are placedinto groups called blocks and the blocks are linked through what is calledBlockchain.The transactions in oneblock are considered to have happened at the same time. These blocksare linked to each-other (like a chain) in a proper linear, chronological orderwith everyblock containing the hash of the previous block.Howdoes it work?The problem consists inthe fact that any node in the network can collect unconfirmedtransactions and create a block and then broadcasts it to rest of the networkas a suggestionas to which block should be the next one in the blockchain.
The solution arriveswith the introduction of a mathematical puzzle: each block will beaccepted in the blockchain provided if it contains an answer to a very specialmathematicalproblem.The Blockchain validation process involves a verificationand approval phase based on calculation resources that are made available bythe Blockchain participants and which are aimed at solving complex problems orcryptographic puzzles and which allow to have a Distributed Consent and no morethan a consent based on a third party intermediary or a centralized institutionor institution. Those who participate in the resolution of the problem and whotherefore contribute to the validation of the process and the transaction arecalled Miner and their intervention, which needs to be carried out withimportant resources, is remunerated through the issuance of a virtual currencyor cryptocurrency. The logic that underlies this process starts from theassumption that in order to avoid fraud risks, in particular by a”node” of the Blockchain, it is necessary to create obstacles andcomplications on the whole validation process. Specifically, each node thatintends to participate in validation must also solve a complex problem in theform of a cryptographic puzzle. The puzzle is designed to compete all the nodesand all contribute to the resolution by making available its computing power.The node that will be able to solve the cryptographic puzzle will have theright to validate the block with the presentation of the Proof of Work which isalso the proof of the solution of the puzzle.
For this commitment and for thisresult the node is remunerated with a Unit of value that depends on the type ofBlockchain. The node generating ablock needs to prove that it has put enough computing resources to solve amathematical puzzle. For example, a node can be required to find a “nonce”which when hashed with transactions and hash of previousblock produces a hash with certain number of leading zeros. The average effortrequired isexponential in the number of zero bits required but verification process isvery simple andcan be done by executing a single hash.
First node, to solvethe problem, broadcasts the block to rest of the network.The nodes donatingtheir computing resources to solve the puzzle and generate block are called”miner nodes” and are financially awarded for their efforts.The nodes are not “public”, that is, they donot know each other and the Proof of Work also represents the way to build arelationship of “trust” based on the concrete collaboration to thesolution of the tests that must be validated.The network onlyaccepts the longest blockchain as the valid one. Hence, it is next toimpossible for an attacker to introduce a fraudulent transaction since it hasnot only togenerate a block by solving a mathematical puzzle but it has to at the sametimemathematically race against the good nodes to generate all subsequent blocks inorder for itmake other nodes accept its transaction and block as the valid one. This jobbecomes evenmore difficult since blocks in the blockchain are linked cryptographically together.