Operations of blockchain –
Blockchain – It is a distributed/decentralized ledger, which allows all the stakeholders in a network to interact, which is enabled through a global network of consensus eliminating the need of middlemen for parties to conduct transactions or exchange information. It also poses a threat to entities such as banks and credit providing companies as it allows the stakeholders in the blockchain to send money and information through blockchain as soon as it is tokenized or gets a value in the digital world. The transactions on the chain are verified in moments and the data is stored in blocks, which is linked to the previous block and so on, which creates a chain. Each block though should refer to the previous block in order to be validated or to be considered as valid. It is a constantly growing ledger that keeps a permanent record of all the transactions that have taken place, in a secure, chronological and immutable way.
The basic work of Blockchain heavily relies on Cryptography – it refers to the study and application of techniques used to transmit, protect and store information communications in a secure and private way, in order to avoid being intercepted by third party ledgers.
Cryptography further has 2 components which are -:
Encryption – process of converting information into unintelligible code to protect it.
Decryption – process of converting encrypted information back into unencrypted form.
The most basic cyphering technique used in Blockchain is CEASER CYPHER, a type of substitution cypher in which each letter in the plain text is replaced by a letter, some fixed number of positions down the alphabet.
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The texts need a key in order to be encrypted and decrypted by a party, and the most extensive form of cryptography used in blockchain is Public key cryptography. It is a cryptographic system that uses two keys, a public key which allows anyone to encrypt a message and can be shared with everyone, and a private key known only to the recipient of the message, in this way no matter who tries to hack the transmission of the message, and even if they do have the public key, he would not be able to decipher the message as the private key has already been transferred to the recipient in advance to decipher the message. The same is also used to generate digital signatures to validate the authenticity of data.
Transactions in a blockchain are grouped into BLOCKS which are assembled chronologically, these blocks are linked together using cryptographic hash. If anyone tries to make a modification to any information in the blockchain, it will change the cryptographic hashes in the chain making it visible that the information has been tampered with.
A Cryptographic hash is a function that takes input (i.e any message) of any length and returns a fixed size alpha-numeric string called a “hash value”. This hash value serves as a digital fingerprint of the message. There are several functions of the same -: