Date: October 1, 2021

Subject: How/what blockchain technology is and does

MLA/APA citation:  Crosby, Michael, et al. “Blockchain Technology - UC Berkeley Sutardja Center.” UC Berkeley Sutardja Center, 16 Oct. 2015, scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf. 

 

Analysis: 

This week I had decided that being a blockchain solution architect would be the best career in blockchain for me. A blockchain architect is someone who works to implement blockchain in technology that leverages cross-asset frameworks and concepts. After some research, I found out that the first step to becoming a solution architect is to understand how blockchain works.

 

What blockchain technology does/is?

Blockchain is the system of creating a distributed consensus, where every node on the ledger checks and verifies any digital information, transaction, or event to make sure it is not false or fake. But the process of achieving this distributed consensus starts with the majority of the people on the system verifying the transaction/event. And once this information is verified and entered, this information can not be erased - making it immutable. In addition, blockchain also keeps certain verifiable records for every transaction, as a sort of proof or certificate of verification.”To use a basic analogy, it is easy to steal a cookie from a cookie jar, kept in a secluded place than stealing the cookie from a cookie jar kept in a marketplace, being observed by thousands of people. “ Showing how making blockchain a distributed consensus prevents fraudulent information and people because it is being checked by many.

 

The major problem blockchain solves is that many digital assets and transactions rely on a third party entity “for the security and privacy of these assets”. But the problem with this is that even these third-party entities can be hacked, manipulated, or compromised. In addition, “  The role of a trusted third party is to validate, safeguard and preserve transactions, However. A certain percentage of fraud is unavoidable in online transactions and that needs mediation by financial transactions. This results in high transaction costs.  “ Therefore blockchain uses a distributed consensus and keeps the anonymity of the user to eliminate these 3rd parties, keeping your privacy, and assets safe while decreasing costs.

-> eliminating the middle man

 

How does blockchain technology work?

Instead of using/needing to have trust in a third party, blockchain uses cryptographic proof in order to execute online transactions. And each transaction done will be protected by a digital signature. This is done by a “Private key” being sent to the “Public key “ of the receiver. Then to spend the money the owner of the crypto needs to prove ownership of the private key. ( the Private key gives the key holder’s transaction rights. Private keys also sign transactions (similar to digital checks processed to the network), Therefore, if someone gets your private key they will have full access to all your funds. The public key in contrast is like an address that tells people where to send the transections to, then the private key allows you access to your funds)

However, blockchain had an issue, and this was in the order of the transactions that are sent to every node on the network. Because the transactions do not come in the order they are generated, this causes confusion and can result in double spending of the cryptocurrency “Considering that the transactions are passed node by node through the Bitcoin network, there is no guarantee that orders in which they are received at a node are the same order in which these transactions were generated. “

 

However, this solution is solved by a race! Each node that enters the system is given a very difficult math problem that it needs to solve ( taking up to around 10 minutes to guess the answer and generate a block), therefore the order is determined by which node solves the problem first. However, sometimes nodes solve the problem and broadcast the block to the networks at the same time, which can lead to several possible branches. To me, I found this method very creative and clever because it not only help determine the order of the nodes to become blocks but also prevents attackers from introducing fraudulent transactions because they now have to solve an extremely (near impossible) math problem and race aginst legitimate node to generate blocks. Making it near impossible for others to enter the system. Once again making it extremely secure.

This information was very relevant to me because it helps me understand how and what the process is to make a highly secure, immutable, distribute, anonymous ledger - also known as the blockchain. This will help me in my career choice of a solution architect because it will help me understand the use-cases of blockchain and how I can implement it in different ideas. I find this information very surprising, and after understanding a little more about blockchain, it reminds me of a galaxy that is vast but holds potential. One part I found extremely fascinating was the fact that they use mathematics in a method of a race between nodes to see who solves the problem first. And this determines the order/rank of the nodes/blocks. I also found it interesting how every aspect of the blockchain is checked and made to keep things secure, as if someone had looked at all the possible problems with this technology and solved it in the most efficient way,(ex. the public and private key solving security issues. Going forward, I wish to continue my study in how blockchain works and also learn the different aspects and use-cases for blockchain technology.