Introduction of Blockchain

What is BlockChain

To understand Blockchain lets take an example, in our day to day value transfer we need a third party which takes care of facilitating all the transactions in Centralizing way for e.g banks for money, notary for land transfer etc maintaining a ledger.
This Centralization concentrates power in hands of few individuals. What if we return power back to people by Decentralizing it?

In November 2008, Satoshi Nakamoto published a Whitepaper for a new monetary system which,

This monetary system maintained a Digital Ledger on peer to peer network of nodes (individual computers) having following characteristics:
Data distribution

Consistent

Immutable

Trustless

What is a Digital Ledger

A Ledger can be understood as an ordered list of transactions meant for book keeping. When we maintain that bookkeeping online it is termed as Digital Ledger. A simple ledger is shown below maintaining records of all the value transfers between multiple parties,

Date Value Sender Receiver
2018-01-01 $10 Kamran Palash
2018-01-02 $12 Kamran Mayank

How transaction is appended to Digital Ledger

Proof of Work


Proof of Work is a consensus algorithm in which computation power is deciding criteria to win an election.

Suppose we want to append a value transfer between A and B to Blockchain. Value transfer is represented as transaction in Blockchain. To append this transaction following steps occurs in sequence

Proof of Stake


Proof of Stake is a consensus algorithm in which Economic Stakes are deciding criteria to win an election.

Stake can be defined as the amount of wealth (currency of that Blockchain) that a miner is willing to put on stake i.e. lock up for a certain amount of time. Higher the stake higher his chances to win the next election i.e getting the opportunity to mine next block and earn reward.

TL;DR

Blockchain can be understood as a code that runs on the computers of all the participants in the trustless network.

References

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