Blockchain – Resolving Conflicts
Blockchain is a distributed database that facilitates peer-to-peer trade (including Bitcoin transactions). In this context, any transaction involving a sender, a recipient, and money is considered a trade. Let us first examine the Bitcoin principle before moving on to this aspect.
What Is Bitcoin?
In essence, Bitcoin is a digital or virtual currency that can be exchanged or traded among two peers without the need for an intermediary. Blockchain has expanded significantly in the last few years in a number of industries, including finance, medicine, and defense. Many Indian YouTube personalities use their platforms to promote cryptocurrency for businesses like CoinDCX, the country's first digital currency marketplace where users can buy and sell Ethereum, Dogecoin, and other currencies in addition to Bitcoin.
How Does Blockchain Operate?
Consider a scenario in which Steve and Jake, two individuals, wish to speak with one another. Steve gives Jake a private message. As seen in the image below, a malicious snooper could quickly obtain the OTP that Steve sent and use it for nefarious purposes during transmission.
Let's now imagine that Steve and Jake decide to interact via the cutting-edge Blockchain network after learning about it.
We find that a data snooper cannot decrypt a message sent via a blockchain network.You may be wondering why only Jake can read the email if there is a special feature that prevents the data snooper from decrypting it. It is nothing more than a private key, which is further defined by the active use of public-key cryptography, also known as asymmetric key cryptography, which is utilized in blockchain technology.
Asymmetric cryptography was developed to secure communication among two network users. It involves the utilization of two keys: a private key for decryption and a public key for encryption. In this case, the private key is accessible only to the owner and is made public within the network. Another name for a private key is a secret key.
Rule: A piece of data can be encrypted using a public key, but only the private key that corresponds to it can be used to decrypt it.
Now, let's return to the original question: how does Jake decipher the text that Steve sent? Before sending the communication, Steve encrypts it using Jake's public key. This prevents any third party, such as a data snooper, from being able to decrypt the message; instead, only Jake knows the private key.
Thus, Blockchain protects messages sent amongst participants in a network by using cryptography. It aids in the security of money transfers and offers secure communication.
Let's examine how transactions happen in a Blockchain setting.
A blockchain is an updated database of data (transactions). A block contains the storage of these transactions. A blockchain is a database that stores knowledge or activities in the form of "blocks," much like a college has a computer that holds data about its students.
There are three main parts to a block:
- Transaction: The Bitcoin blockchain stores information about a transaction, including the sender (using their public key), the recipient (using their private key), and the quantity of coins to be sent.
- Hash: every block in the distributed ledger has a unique hash that is used for recognizing it.
- The hash of the previous block: In blocks, this is how links are made.
It is crucial to understand that the blockchain's initial block, known as the Genesis Block, has no earlier hash marks because it is the chain's first block.
How do these blocks containing transactions get added to the blockchain?
The method of adding records of transactions to the ledger in the form of blocks is referred to as Bitcoin mining. Miners are the nodes in a network that fight with one another to successfully generate a valid block and add it to the distributed ledger.
Because it takes a lot of computing power to create a valid block, there is a system of incentives in place that uses the Proof-of-Work (PoW) method to reward miner for their labor. In order to create a valid block and then effectively add it to the blockchain, miners must solve challenging puzzles that demand a lot of processing power. This consensus method, known as the proof of work (PoW) algorithm, is used in the network of blockchain tokens.
The accompanying diagram and its associated steps help explain how blocks, or transactions, are added to the chain.
The following lists the steps that are involved in a Bitcoin transaction:
- Jake starts a transaction with Steve for, let's say, fifteen Bitcoins.
- The transaction is flooded across the P2P network in a block.
- Through the use of the proof-of-work agreement algorithm, the miners verify the transaction.
- The transaction-containing new block is appended to the blockchain.
- The transaction is completed when Steve gets the 15 BTC that Jake sent.
This is the interesting bit, the subject we have been meaning to talk about. Step 5 of the instructions above may lead to a conflict when several miners attempt to add their concurrently created blocks to the blockchain's final valid block. Which block will be added to the blockchain in this scenario?
Assume that Iris, Steve, and Jake are the miners of the blockchain who concurrently produce their blocks of data, also referred to as candidate blocks (shown in blue, yellow, and green, respectively). Selecting the block to be added to the chain must be decided upon among the aforementioned prospective blocks.
How Does Blockchain Help Resolve Conflicts?
In order to reach a consensus on the blockchain's legitimate structure, all nodes in the network adopt the rule of the longest chain to resolve conflicts like this one. A miner in the network of nodes must have a machine with a lot of processing capacity in order to add a node to the ledger. Let's assume, for this argument, that Jake's computer is more powerful than Steve and Iris's computers. Consequently, Jake can make blocks more quickly than Iris and Steve.
Because Jake's block was generated more quickly than Steve's and Iris's, it comes first in the entire chain. The miners then add their blocks (shown below in red) on the highest level of Jake's blog (shown below in yellow) as they attempt to develop other valid blocks in the meantime.
How Does Blockchain Help Resolve Conflicts?
In order to reach a consensus on the blockchain's legitimate structure, all nodes in the network must adopt the rule of the longest chain to resolve conflicts like this one. A miner in the network of nodes must have a machine with a lot of processing capacity in order to add a node to the ledger. Let's assume, for this argument, that Jake's computer is more powerful than Steve and Iris's computers. Consequently, Jake can make blocks more quickly than Iris and Steve.
Because Jake's block was generated more quickly than Steve's and Iris's, it comes first in the entire chain. The miners then add their blocks (shown below in red) on the highest level of Jake's blog (shown below in yellow) as they attempt to develop other valid blocks in the meantime.
What Happens to The Transactions Inside These Orphaned Blocks?
It's crucial to remember that although the transactions contained in the orphan block are legitimate because a network user started them, they do not adhere to the principle of the longest chain and, hence, cannot be added to the blockchain. These transactions are, therefore, returned to the processing pool, which is a collection of unmined transactions, in order to ensure miners can select them and begin mining them once more.
Blockchain dispute resolution systems do, however, have certain drawbacks and difficulties.
Describe any legal or regulatory ambiguities about their applicability and acceptance in different legal contexts. Avoid prejudice, deceit, conspiracy, or corruption to ensure the dispute resolution system is fair and of high quality. To strike a balance between scalability and dispersion, avoid network congestion, expensive fees, or centralized risks. By offering explicit instructions, user interfaces, and reporting channels, you can enhance user education and interaction.