Web 3.0 Simplified Part 2

Sepehr Vafaei

In this part, we focus more on how a blockchain works in plain English.

You most probably know that Tokens are digital assets. There are fungible tokens like Ether and non-fungible tokens also referred to as NFTs.

When we say fungible tokens, we mean that for example, one Ether coin has the same value as another Ether coin. But that’s not the case with NFTs. Each NFT is unique.

Some famous figures in tech and business, like Jack Dorossy who is the co-founder of Twitter, have claimed that web 3.0 is not centralized and is owned and ruled by VCs (Venture capitals) and LPs (Limited Partners).

Blockchain which makes web 3.0 decentralized is a chain of blocks as the same suggests. It is a distributed ledger. A block contains data, a hash, and the hash of its previous block. The quality and quantity of the data that you can save on a block differ from blockchain to blockchain. A hash is like the fingerprint of a block. Changes in the block change its hash.

So changing a single block will make all the next blocks invalid since each block also holds the hash of the previous one. That is one way that makes illegal activities difficult. But using hashes is not enough to prevent tampering. You could effectively tamper with a block and recalculate all the hashes of other blocks to make your blockchain valid again.

To solve the mentioned problem, blockchains have something called proof-of-work. It’s a mechanism that slows down the creation of new blocks. In Bitcoins case, it takes about 10 minutes to calculate the required proof-of-work and add a new block to the chain. This mechanism makes it very hard to tamper with the blocks because if you tamper with one block, you’ll need to recalculate the proof-of-work for all the following blocks.

So the security of a blockchain comes from its creative use of hashing and the proof-of-work mechanism. But there is one more way that blockchains secure themselves and that’s by being distributed. Instead of using a central entity to manage the chain, blockchains use a peer-to-peer network and anyone is allowed to join.

When someone joins the network, he gets the full copy of the blockchain. The node can use this to verify that everything is still in order. When someone creates a new block, that new block is sent to everyone on the network. Each node then verifies the block to make sure that it hasn’t been tampered with. If everything is fine, each node adds this block to its blockchain. All the nodes in this network create consensus. They agree about what blocks are valid and which aren’t. Blocks that are tampered with will be rejected by other nodes in the network. 

So to successfully tamper with a blockchain you’ll need to tamper with all blocks on the chain, redo the proof-of-work for each block, and take control of more than 50% of the peer-to-peer network. Only then will your tampered block become accepted by everyone else. This is almost impossible to do.

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Attributions (Resources):

https://bitcoin.org/en/

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