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The growth of Bitcoin and Blockchain technology has bot so rapid, that even those who toevluchthaven’t heard of cryptocurrency or know about its working, are looking to invest and explore this field. This Blockchain tutorial blog will essentially provide you with all the fundamental skill you need regarding Bitcoin and Blockchain te the following sequence:
You may go through this recording of Blockchain Tutorial where our instructor has explained the topics ter a detailed manner with examples that will help you to understand this concept better.
Blockchain Tutorial | Blockchain Technology | Edureka
Blockchain technology and the crypto-currencies have today become a parallel verhoging where people have commenced performing their standard transactions. Now, if a fresh system is leisurely substituting an existing system then there vereiste be some issues with the current system. Wij will start this Blockchain tutorial blog by understanding the problems of the current banking system.
Issues with Current Banking System:
Any existing system will have some issues. Let us look at some of the most commonly faced issues with the Banking system:
High Transaction Fees
Let’s look at an example to understand this kwestie better:
Here, Chandler is sending $100 to Joe but it vereiste pass through a trusted third party like a Handelsbank or Financial service company before Joe can receive it. A transaction fees of 2% is deducted from this amount and Joe only receives $98 at the end of the transaction. Now this may not seem a big amount but imagine if you were sending $100,000 instead of $100, then the transaction fees also increases to $Two,000 which is a big amount. Spil vanaf a report from SNL Financial and CNNMoney, JPMorgan Pursue, Handelsbank of America and Wells Fargo earned more than $6 billion from ATM and overdraft fees ter 2015.
Double-spending is an error ter digital metselspecie scheme te which the same single digital token is spent twice or more. To help you understand this problem better, let mij give you an example:
Here Peter has only $500 ter his account. He initiates Two transactions at the same time to Adam for $400 and Mary for $500. Normally this transaction would not go through spil he doesn’t have sufficient balance of $900 ter his account. However, by duplicating or falsifying the digital token associated with every digital transaction, he can finish thesis transactions without the needed balance. This operation is known spil Dual Spending.
Televisiekanaal Frauds and Account Hacking
Te India, the number of fraud cases related to credit/debit cards and Internet banking wasgoed 14,824 for the year 2016. The netwerk amount involved te thesis frauds wasgoed Rs 77.79 crore, of which Rs 21 crore wasgoed from internet frauds and Rs 41.64 crore wasgoed from ATM/debit card-related frauds.
Financial Depressie and Crashes
Imagine providing all your saving to someone you trust only to know that they have gone and lost it somewhere else. That’s what happened te the 2007-08 when Banks and Investment Organisations had borrowed strenuously and lent it spil subprime mortgages to people who could not even pay back thesis loans. This ter turn lead to one of the greatest financial laagconjunctuur everzwijn seen and wasgoed estimated to have caused losses close to $11 Trillion ($11,000,000,000,000) worldwide. This wasgoed just one of the most popular examples, how often have wij heard of Banks and Financial service companies crash due to internal frauds? The entire third-party system is something that is built on vensterluik trust on the middle man.
Wij have seen some of the most common problems faced by everyone. Wouldn’t it be excellent to have a system that overcame thesis problems and provided us with a That’s exactly what Blockchain Technology does.
Let us now attempt understand how Blockchain and Bitcoins solve thesis issues spil the next part of this Blockchain tutorial blog.
How does Blockchain solve thesis issues?
Below are some of the ways through which the Blockchain technology tackles the above mentioned issues:
The Blockchain system goes after a decentralized treatment when compared to banks and financial organisations which are managed and governed by Central or Federal Authorities. Here, everyone who is part of the system becomes identically responsible for the growth and downfall of the system. Rather than one single entity holding the power, everyone who is involved with the system holds some power.
The ledger which holds the details of all transactions which toebijten on the Blockchain, is open and fully accessible to everyone who is associated with the system. Once you join the Blockchain network, then you can download the accomplish list of transaction since its initiation. Even tho’ the finish ledger is publicly accessible, the details of the people involved te the transactions remains totally anonymous.
Verification of Every Individual Transaction
Every single transaction is verified by cross-checking the ledger and the validation signal of the transaction is sent after a few minutes. Through the usage of several complicated encryption and hashing algorithm, the kwestie of dual spending is eliminated.
Low or No Transaction Fees
The transaction fees are usually not applicable but certain variants of Blockchain do implement certain minimal transactions fees. Thesis transaction fees are however relatively fairly less when compared to the fees implied by banks and other financial organisations. If a transaction needs to be ended on priority then an extra transaction fees can be added by the user so spil to have the transaction verified on priority.
Now that wij have spoken about the issues with the current existing system and understood how the Blockchain technology overcomes thesis challenges, I am fairly sure you voorwaarde have got some understanding of the Blockchain System.
At this point you might still be wondering spil to what exactly is the Blockchain and Bitcoin. So let’s attempt to understand thesis significant concepts ter the next part of this Blockchain tutorial.
What is Blockchain and Bitcoin?
Before wij go on to understand what is Blockchain, it significant that you understand what is Bitcoin:
Bitcoins are a crypto-currency and digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. That means they can be used like a usual currency, but don’t physically exist like dollar bills. They are an online currency which can be used to buy things. Thesis are similar to “digital cash” that exist spil kattig on people’s computers. Bitcoins exist only ter the cloud, like Paypal, Citrus or Paytm. Even however they are virtual, rather than physical, they are used like metselspecie when transferred inbetween people through the web.
The Bitcoin system is peer-to-peer network based and transactions take place inbetween users directly, without an intermediary. Thesis transactions are verified by network knots and recorded ter a public distributed ledger called a Blockchain. Since the system works without a central repository or single administrator, Bitcoin is called the very first decentralized digital currency.
Bitcoin production makes them a unique currency. Unlike normal currencies, Bitcoins cannot be created spil needed. Only 21 Million Bitcoins can be created, of with 17 million have already bot created. Bitcoin get created whenever a block containing valid transactions is added to the Blockchain. This is the only means for creating Bitcoins and through various mathematical and encryption algorithms wij ensure no fake Bitcoins are created or circulated. Let us now understand more Blockchain.
What is Blockchain ?
Blockchain can be called the spine of the entire crypto-currency system. Blockchain technology not only helps with the users perform transactions using crypto-currencies but also ensures the security and anonymity of the users involved. It is a continuously growing list of records called blocks, which are linked and secured using cryptographic technologies. A Blockchain can serve spil “an open and distributed ledger, that can record transactions inbetween two parties te a verifiable and voortdurend way.” This ledger that is collective among everyone ter the network is public for all to view.This brings te transparency and trust into the system.
A block is the ‘current’ part of a Blockchain which records some or all of the latest transactions, and once ended goes into the Vlockchain spil voortdurend database. Each time a block gets ended, a fresh block is generated.
The Blockchain is typically managed by a peer-to-peer network, collectively adhering to a protocol for validating fresh blocks. Once recorded, the gegevens te any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority. Transactions once stored ter the Blockchain are voortdurend. They cannot be hacked or manipulated. Wij will learn more about this once wij get into the concepts of Blockchain.
You may go through this brief animated movie of What is Blockchain to understant the topics with examples that will help you to understand this concept better.
What Is Blockchain | What Is Bitcoin | Blockchain Tutorial | Edureka
Now I hope you have a better understanding of both Bitcoin and Blockchain. Moving ahead ter our Blockchain tutorial blog, let us look at the features of Blockchain technology to help us understand why it has become so popular.
Features of Blockchain
Below are the most significant features of Blockchain technology that has made it a revolutionary technology:
- SHA256 Hash Function
- Public Key Cryptography
- Distributed Ledger &, Peer to Peer Network
- Proof of Work
- Incentives for Validation
Lets attempt to understand each one of them one by one.
SHA256 Hash Function
The core hash alogorithm used ter blockchain technology is the SHA256. The purpose of using a hash is because the output is not ‘encryption’ i.e it cannot be decrypted back to the original text. It is a ‘one-way’ cryptographic function, and is a stationary size for any size of source text. To get a better understanding, let us look at an example below:
If you look at the very first example, wij are feeding the input spil “Hello World” and getting an output spil “a591a6d40bf420404a011733cfb7b190d62c65bf0bcda32b57b277d9ad9f146e”. However, by just adding an “!” at the end, the output totally switches to “7f83b1657ff1fc53b92dc18148a1d65dfc2d4b1fa3d677284addd200126d9069”. If wij switch “H” to “h” and “W” to “w”, then the output value switches to “7509e5bda0c762d2bac7f90d758b5b2263fa01ccbc542ab5e3df163be08e6ca9”.
I hope with this example you have understood how ingewikkeld the algorithm is spil even the slightest switch te the input can cause a massive switch te the output.
Public Key Cryptography
This cryptographic mechanism helps the user by creating a set of keys referred spil Public key and Private key. Here the Public key is collective with others whereas the Private key is kept spil a secret by the user. To understand the roles of thesis keys, Let us look at the example below to get a better understanding:
If Chandler sends some bitcoins to Joey, that transaction will have three chunks of information:
- Joey’s bitcoin address.(Joey’s Public key)
- The amount of bitcoins that Chandler is sending to Joey.
- Chandler’s bitcoin address.(Chandler’s Public key)
Now all this gegevens along with an encrypted digital signature is sent through the network for verification. The Digital signature is again a hash value achieved by the combination of the Chandler’s bitcoin address and the amount he is sending to joey. This digital signature is encrypted by the private key. Once this gegevens is received by a miner who has to verify this transaction, there are Two process he does at the same time:
- He takes all the un-encrypted gegevens like transaction amount and public keys of both Joey and Chandler, and feeds it to a hash algorithm to get a hash value which wij shall call Hash1
- He takes the digital signature and decrypts it using chandler’s public key to get a hash value which wij will call spil Hash2
If both Hash1 and Hash2 are the same then it means that this a valid transaction.
Distributed Ledger and P2P Network
Every single person on the network has a copy of the ledger. There is no single centralized copy. Let mij help te you understanding what a ledger is with the following example: Suppose you need to send Ten Bitcoins to your friend John where your Bitcoin balance is 974.65 and John here with a balance of 37. Your balance will be deducted by Ten BTC and credited into John’s account.
Blockchain has a unique way to implement this. There are no accounts and balances te the Bitcoin Blockchain ledger. Every transaction from the very first one is stored on a continuous growing database called Blockchain. There are blocks averaging around 2050 transactions and spil of today, there are 484,000 blocks te the Blockchain with around 250 million transactions.
This ledger is distributed across all users of Bitcoin Blockchain, i.e., the ledger has no central location where it is stored. Everyone on the network possesses a copy of the ledger and the true copy is the collection of all the distributed ledgers.
Proof Of Work
You might be wondering if everyone identically wields the ledger, who adds blocks to the Blockchain? How can people trust this person?
For this, wij have the concept of proof of work. It is basically like solving a very big puzzle. It requires lots of computational effort. This work is done by people ter the Bitcoin network wij call miners. The work of thesis miners is to verify the transactions and solve a ingewikkeld mathematical puzzle associated with the block being created. The difficulty of the problem is adjusted so that on average a block is solved te Ten minutes. Miners search for a specific nonce(mathematical value) which gives the desired hash which is predetermined. The current difficulty level is such that you need to attempt about 20.6 quadrillion nonce to get the keurig hash.
Each block has a hash value which is the combination of the previous block’s final hash, transaction data’s hash value and the nonce. The final resulting hash for the block vereiste embark with a specified number of trailing zeroes. It is this computation to find the nonce which pleases the condition that makes mining so computationally expensive.
So the person who finds this nonce is the successful miner and he/she can add their block to the blockchain. Through our P2P distributed network, he/she broadcasts their block and everyone verifies if hashes match, updates their blockchain and moves on to solving the next block instantly.
Incentives for Validation
The last step of a Bitcoin transaction is to providing a prize to the miner who has created the latest block. This prizes is provided by the Blockchain system for validating the transactions and maintaining the Blockchain. Presently the prize vanaf block is 12.Five BTC (Rs Three,427,850/- or $ 53,390). This is the most interesting part of Bitcoin Mining.
Bitcoin incentives is the only way to generate fresh currency into the system and it is believed that by 2140, all 21 million bitcoins will be mined.
With this, I hope you now have more understanding and appreciation towards the Blockchain technology. Blockchain is much more than Bitcoin. Finance is just one of the many industries Blockchain aims to disrupt. Moving ahead with our Blockchain tutorial, let us now look at one such example of IBM and Maersk, to understand how the Supply Chain Industry is disrupted by blockchain.
Blockchain Tutorial: Use Case
Maersk is a Danish business conglomerate with activities ter the wegtransport and logistics, and energy sectors. Maersk has bot the largest container ship and supply vessel technicus te the world since 1996. The company is based te Copenhagen, Denmark with subsidiaries and offices across 130 countries and around 88,000 employees.
IBM is an American multinational technology company mainly working on business solutions, security solutions and storage solutions since 1921
Being a part of an enormously dynamic Supply Chain industry, tracking the slightest switch is of highest priority for the client. They needed a solution that could enable them to accomplish the shipping process without having the delay te paper work. A solution that would be able to bring together all the stakeholders of the system and provide a real-time status on the shipment.
Today, 90% of the goods ter global trade are carried by the shipping industry. This supply chain is flowed by the complexity and sheer volume of point-to-point communication. Thesis communications are across a loosely coupled web of land transportation providers .freight forwarders, customs, brokers, government’s ports and ocean carriers processing. Documents and information for a container shipment is estimated to cost more than twice that of the actual physical transportation.
IBM and Maersk are addressing this problem with a distributed permission toneelpodium accessible by the supply chain ecosystem designed to exchange event gegevens and treated document workflows.
Merck and IBM are employing Blockchain technology to create a global tamper proof system by the digitizing trade workflow and tracking shipments end-to-end. This eliminates frictions including costly point-to-point communications. The collaboration will launch with potential capability to track millions of container journeys vanaf year and integrate with customs authorities on selected trade lanes.
- Provided a secure Gegevens Exchange verhoging for all the stakeholders involved te the supply chain system.
- Established a Tamper proof repository to store all the documents involved spil part of the process.
- Regular shipping events help reduce significant Delays and Frauds, saving Billions of dollars annually.
- Diminished the barrier inbetween trade organisations thereby enlargening worldwide GDP by 3%.
- Helped increase the overall trade volume by 12%.
This is how Blockchain technology helped Maersk and has bot helping many other companies worldwide. Eventually spil part of this Blockchain tutorial, wij will look at a demo spil to how you set up a private autonomous Blockchain on your system.
Blockchain Tutorial: Demo
Wij will implement a digital canap using Ethereum Blockchain. Ethereum is an open-source, public, blockchain-based distributed computing podium. The systems will permit us to:
- Make a cryptocurrency with a immobile market supply and tokens to represent real world asset values.
- Create an autonomous private Blockchain with rules on spending money.
- Mine for a fresh Ether by validating transactions.
The demo can be divided into Four steps:
- Cloning Geth Code
- Creating a Genesis Block
- Making Rules for our Blockchain
- Validating &, Mining Ether
Step 1: Cloning Geth Code:
geth is the the guideline line interface for running a utter ethereum knot implemented ter Go. By installing and running geth , you can take part te the ethereum frontier live network and
- Mine real ether
- Transfer funds inbetween addresses
- Create contracts and send transactions
- Explore block history
Cloning the geth repository from github. To do this, open a fresh terminal and execute the following directive:
After you have successfully cloned the opstopping from github, wij need to branch the latest version of geth.
Step Two: Creating Genesis Block
A genesis block is the very first block of a block chain. Switching the genesis block is a way to definitively fork yourself away from the bitcoin blockchain, i.e, begin a fresh network with it’s own separate history. To create the genesis opstopping, execute the following instructions:
Step Three : Making Rules for our Blockchain
The rules for our Blockchain will be included te the genesis.json verkeersopstopping wij have created. Add the following code te your genesis.json opstopping:
nonce: A 64-bit hash, which proves, combined with the mix-hash, that a sufficient amount of computation has bot carried out on this block.
timestamp: A scalar value equal to the reasonable output of Unix time() function at this block inception.
mixhash: A 256-bit hash which proves, combined with the nonce, that a sufficient amount of computation has bot carried out on this block.
difficulty: A scalar value corresponding to the difficulty level applied during the nonce discovering of block.
alloc: Permits defining a list of pre-filled wallets. It’s an Ethereum specific functionality to treat the “Ether pre-sale” period.
parentHash: The Keccak 256-bit hash of the entire parent block header (including its nonce and mixhash).
extraData: An optional free, but max. 32-byte long space to conserve brainy things for ethernity.
gasLimit: A scalar value equal to the current chain-wide limit of Gas expenditure vanaf block.
coinbase: The very very first transaction included ter the block by the miners.
Now wij need to initialize the blockchain. You can do that by using the following directive:
Now that wij have initialized the blockchain, it’s time that wij give geth control access to it. Execute the following instruction to commence the geth console:
Step Four: Validating &, Mining Ether
Ter the Geth console, execute the following directive:
individual.newAccount() : it creates a fresh account spil part of your blockchain which has a specific wallet fastened to it
eth.accounts: it helps you check the various accounts which are part of your blockchain
eth.blockNumber(): this helps you to identify the number of blocks that are part of your blockchain
miner.commence(): this function is used to commence the mining process
Below you can see the mining application running:
miner.zekering(): it stops the mining process
eth.blockNumber(): ececuting this guideline after the mining process tells you at which block number you are at after performing the mining operation
eth.getBalance: (“account number”): this guideline is used to check the ether balance ter the specified account
With this wij have successfully mined ether and ended our Banking Demo. This brings us to the end of this blog. I hope you liked this Blockchain tutorial blog. This wasgoed the very first blog of the Blockchain tutorial series. This Blockchain tutorial blog will be followed by my next blog, which will concentrate on Blockchain technologies and Bitcoin Transactions. Do read them spil well to learn more about Blockchain.
If you wish to learn Blockchain and build a career ter Blockchain Technologies, then check out our Blockchain Certification Training which comes with instructor-led live training and real-life project practice. This training will help you understand Blockchain ter depth and help you achieve mastery overheen the subject.
Got a question for us? Please mention it te the comments section and wij will get back to you.