Adopting Blockchain Technology (Mint)
Mains Paper 3: Science and Tech
Prelims level: Core Components of Blockchain Architecture
Mains level: Highlights the Core Components of Blockchain Architecture
- Blockchain is a foundational technology or a platform that allows
designing a secure way to record transactions and circulate it among
signatories, or any kind of target group with an Internet connection.
- It's a distributed ledger technology that stores information across
multiple systems in a secured manner to enable peer-to-peer transactions
based on a trustworthy source. At its core, it is an extremely democratic
ledger that cannot be arbitrarily manipulated and easily shareable.
Core Components of Blockchain Architecture:
- Node - user or computer within the blockchain architecture (each has an
independent copy of the whole blockchain ledger).
- Transaction - smallest building block of a blockchain system (records,
information, etc.) that serves as the purpose of blockchain.
- Block - a data structure used for keeping a set of transactions which is
distributed to all nodes in the network.
- Chain - a sequence of blocks in a specific order.
- Miners - specific nodes which perform the block verification process
before adding anything to the blockchain structure.
- Consensus (consensus protocol) - a set of rules and arrangements to
carry out Blockchain operations.
How Does Blockchain Work?
- Every block in a blockchain is a record of transactions and the more of
the latter, the longer the chain.
- There is minimal identifying information and every block is linked to a
unique ‘digital signature’ of the transacting participants. Every block is
distinguished from another through a unique code which is a string of
- When a debit or credit card is used to make a transaction, VISA or
Mastercard employ their technology to verify the bank account, connect with
banks and process a transaction.
- In blockchain applications, this verifying role is outsourced to several
computers on a network where each has the exact same copy of the block.
- These computers verify the genuineness of transaction by solving
mathematical problems that can only be done in brute-force, energy intensive
ways that require a lot of computational power, and therefore electricity.