Understanding Blockchain: Hashing, Mining, and Decentralization

Blockchain technology ensures security through decentralized consensus, where majority rules prevent malicious alterations.

### Understanding Blockchain: Hashing, Mining, and Decentralization
* 🔍 In the blockchain ecosystem, software checks and compares blockchains to determine which ones are acting **honestly versus maliciously**, emphasizing that "**majority rules**" in this decentralized environment.
* 🔗 The term "nonce" is utilized to solve the problem of **generating hashes that start with a specific number of zeros**, crucial for **validating blocks in the blockchain**.
* 💻 When peers in the network disagree, such as Peer A being accused of malicious activity, they can be **excluded from mining rewards**, showcasing the **decentralized nature of blockchain governance**.
* 🔄 Transactions within blocks are hashed similarly to data, ensuring that any **malicious alteration invalidates the entire blockchain** for the offending peer, thus maintaining **integrity**.
* ⚙ Miners engage in a **computationally intensive process** to find a nonce that meets the **difficulty criteria**, which varies by blockchain, such as **Bitcoin or Ethereum**.
* 🔑 A hash is a **unique fixed-length string** that identifies data, created through hashing algorithms like **SHA-256**, and serves as a **critical component of blockchain security**.
* 🧩 Each block in the blockchain contains a combination of **nonce, transactions, and previous hashes**, which collectively create a **unique hash** that connects all blocks in the chain.
* 📊 The immutable nature of blockchain ensures that any change in past data **invalidates subsequent blocks**, making it **computationally expensive and nearly impossible** to alter historical records without **consensus from the majority of peers**.

so we're going to be going through this blockchain demo on this site right here. Now, the creator of the site has a fantastic video and a fantastic walkthrough, Blockchain 101. It is right on their site, so if you're looking for another explanation, definitely check out his video. It is absolutely fantastic. But the first thing that we really need to do in order to understand blockchain, in order to sign really anything and everything that's going on here, we first really need to understand this SHA-256 hash or hashing just kind of in general. Let's first understand what a hash is. A hash is a unique fixed-length string meant to identify any piece of data. They are created by putting some piece of data into a hash function. In this example, the hashing algorithm used is SHA-256. Now, Ethereum actually uses this right here for its hashing algorithm, which isn't quite SHA-256 but is in kind of this SHA family. But it's really just another way to hash things, and the specific hash

algorithm doesn't matter so much, so this example uses 256, but you can imagine it's the same as the Ethereum hash. They're just gonna, you know, result in a different hash. So, what's going to happen in this application here is whatever data or whatever information we put into this data section here, as you can see below, this hash changes. So, what's happening is this data is running through this SHA-256 hash algorithm, and it's outputting this unique hash. So, this hash is a unique fixed-length string that's going to identify like a blank data piece here, right? So, if I put in, you know, my name, like, you know, Patrick Collins, this is the hash that's going to represent Patrick Collins, right? And you can see even when I put, you know, tons and tons of data in here, the length of the string doesn't change, right? So, it's always going to be the same amount. We can put almost any amount of data in here. There is an upper limit on the max size of the data, but for all intents and purposes, we

can pretty much put any length in here, and you'll see too that, you know, every time I type in Patrick Collins, this hash is always going to be this 7e5B, right? I'm going to delete it. I'm going to do Patrick Collins again, your 7e5B. It's always this. This unique hash is always going to be unique, right? It's always going to be this fixed-length string here. So now we can take this idea, right, of putting this data in here. We can move on to this concept of a block. So with this block concept, we're going to take the exact same thing with this hash, this data section, right? But instead of having everything just being in this singular data area right here, we're going to split this data up into block nuns and data. So all. So what we're going to do is we're actually going to hash all three of these to get this hash, right? We're going to put all three of these. We're going to say all three of these.

are combined. Uh, together we're going to put every all three of them into this hashing algorithm. Uh, to figure it out. So, if I type a bunch of stuff here, we can see that block one with nuns, you know, this nunce and this data, we're going to get this hash. And as you can see, actually, the screen turns red. This block turned red. Now, what happens when I hit this mine button? When I hit this my button, it's actually going to take some time. It's going to think for a little bit. And we can see that the nuns here actually change, right? The nunce is different from what it was before. And this hash now starts with four zeros, okay? And then it, the back turned green. When we're talking about mining, we're talking about miners solving some type of very difficult problem that takes a lot of time to do. Now, in this example here, the problem that uh, the miners had to solve was they had to find a nunce or or a value in this none section that when hashed with at block

number one. With this data, it would start with four zeros. So, the problem here the miners had to solve was to start with four zeros, and the only way for them to really do that is kind of this brute force, you know, trying stuff. So, they tried one. Okay, one didn't work. Okay, two. Nope, two didn't work. Three. Nope. Four. Nope. Five. Six. Okay, five. Well, let's start with one zero, but that's not four. And they have to keep trying all these numbers until they get to this one where, you know, let's hit mine again, where it has four zeros at the top, at the start. Now, this specific problem changes blockchain to blockchain, right? Ethereum has a different problem for miners to solve. Bitcoin has different problems around itself, but this concept is going to be the same. And since Ethereum is proof of stake now, nodes actually take turns solving these problems. Again, we're not going to go too deep into that right now, though. So, they have to take one block is going to be this. This

this concept is going to be all this data. It's going to be the block number, and it's going to be this nonce, right? And so this nonce is the solution, um, is going to be the number that they use to get, like, the solution to the problem, right? So if I go to one here, you know, and I do this again, I'm gonna hit mine, and the nonce changed, right? It went from 1 to 33,128 because this is the nonce that allowed this hash to start with four zeros. And so that's what's happening when blockchain miners are mining. They're going through this process, this very computationally intensive process of trying to find unknowns that fulfills whatever the problem is. So that's really it, actually. So that's a block, and that's really what's happening when miners are mining. They're just looking, there's trial and error, brute force, trying to find this nonce. So now that we know what a block is, let's go to the next step and figure

out okay well what's a Blockchain. So here we have an example of what a blockchain is going to look like, right? We have a combination, you know, we have back here in the block section, we have one block looks like. Now here we have multiple different blocks, right? Each one of these represents a different block, but we have an additional column here, or we have an additional variable here. So like before, you know, we have block nuns and data, right? We have block none's data, but we also have this thing called previous, right? And so this is actually going to be pointing to the previous hash of the last block. So for example, if we go to the last block in this blockchain, it says previously 0x00ae8. And if we look at the hash of block number four, it's 0x00ae8. And then we look at its previous, it's 4 zeros B9. We have 4 zeros B9, and so on, all the way back to our first block, which has previous of just all zeros, right? And so the block with the

previous of all zeros is going to be known as The Genesis block. So, you've probably heard that before. The Genesis Block. It's the first block in the blockchain where the previous hash points to a hash that doesn't actually exist. Now, as you can imagine, kind of the same as how this block worked, how the block nuts and data all go through the hashing algorithm in the blockchain. The block nonce, data, and previous hash all go through this hashing algorithm to figure out, you know, what the hash is. Okay, so if we go to over here, here, you know, for example, if I type in, you know, Patrick, obviously, this is now no longer valid, right? Because this nonce combined with the block, the data in the previous hash aren't going to solve, you know, our problem of having four zeros at the start, right? So, I'm going to go and fix that, and that's kind of an easy way to see it being broken. But let's take a look if I break this block right here. What happens if I, if I

break the data in here. If I do like Patrick in here, you can see that both of these are now red, both of these are now invalid, right? Because the block hash with the nonce, hash with the new data, which is my name Patrick, hashed with the previous block, is now a brand new hash, right? And this block is still pointing to this previous hash right here, right? Is pointing to this previous block, and now it is wrong, and it is messed up. And now, um, and now it's nonce with this previous hash is also wrong, right? And this is where, when we talk about blockchains being immutable, this is exactly how it's immutable, right? Because if I go back and I change anything, you know, if I just typed a right here, the entire blockchain is now invalidated because none of these are going to have nonces that solve this equation anymore. So this is why blockchains are immutable, is because anytime you change one thing, you ruin the rest of the blockchain. Okay, so however though, you know, if a was here originally, we can go ahead and mine

these we can mine all these, but as you can see, you know, this is going to start getting very computationally expensive because I have to go redo basically the entire blockchain. Uh, and the farther and farther down the line you get, the harder and harder it becomes to, you know, rehash and redo all these different blockchains here. Now, this makes a lot of sense, right? So we have this blockchain, it's really hard to change something in the past, but if we do, we can just go ahead and remind it. Now, if I'm the one who controls the blockchain, right? If I'm the one who controls this, you know, and I want to change something in the past, well, okay, great, all I got to do is change this data here and then, you know, mine each one of these. And, you know, obviously, it's going to be very computationally expensive, but it's something that I can do, right, if I'm the one who owns the blockchain. Now, here's where the decentralized nature or the distributed nature really makes it incredibly powerful. So we're

going to go to the distributed tab here, which I also refer to as the decentralized tab here, and it's going to show us what a blockchain looks like in a decentralized manner. So, we have this exact same initial setup here. We have distributed blockchain. We have, you know, our first blockchain, which is kind of exactly as the one from here, but we also have more than once. We have peer A, peer B, and peer C. And when people are talking about peer-to-peer, peer-to-peer transactions, they're really talking, uh, this is kind of that concept that they're talking about, right? So, we have a number of different peers who are running this blockchain technology. They're all weighted equally, right? Each one of these tiers or each one of these nodes, each one of these entities running a blockchain has the exact same power as anybody else, right? So, the way that we can tell very easily which blockchain is correct or which ones are correct are by looking at this end hash here, right, or by looking at where we are in the blockchain.

because again remember this hash that this in this last block here is going to encompass all of the blocks from before, right? Because this last hash is going to have the previous hash here, which includes the previous hash here, which this hash includes the previous hash here, in which so this last hash encompasses everything in here, right? And we can look, we can look at the hash of Peer C, which is four zeros and then e4b. We can look at the latest hash of Peer B, which is four zeros e4b, and then Peer A, which is four zeros e4b. So all of these, here's all of these nodes, all of these decentralized, you know, these independent, um, all these independent users running this blockchain. So after they're all matched up, it's very easy for their nodes to look at each other and say, Hey, great, we are all matched up. Now what? Let's say that A decides that, you know, something happened on the blockchain that they didn't like and they wanted to

go back and change something right. So, let's say they change here, you know, obviously the rest of their blockchain is invalidated, and they have to spend a lot of computational power to catch up to speed. So, let's go ahead and humor it. Let's say that they did. They ended up catching up. They ended up catching up, you know. They ended up mining everything, and now they have a valid blockchain, right. It solves the equation. Awesome. However, in block number three, there's something new, right. This is here, and it shouldn't have been here. This is something that peer A put in by themselves. All that happens now is we look at all the blockchains that are running the software, and we're looking at all the hashes at hash at block number five. So, peer A has this new hash now, zero zero nine BC, but peer B has a different hash, zero zero zero E4B, right. So, who's right? Is it peer A with their new stuff, or is it peer B? Well, that's where the

decentralized number comes in because then we can look at peer C, and peer C also has e4b. So, if you're B and peer C both say, Hey, peer A, you're wrong, get out, right? And peer A will stop being able to participate in the mining rewards because they have essentially forked the blockchain and started their own little blockchain, right, with their own history because they're the only ones with this piece of data in block three, whereas peer B and peer C have nothing in there. So, that really shows why in these blockchain worlds, in this decentralized world, there really is no centralized entity. You know, peer A might have been maliciously motivated to change this block number three. However, democracy rules, right? The majority rules in the blockchain. If you're B and peer C, people say, Hey, you know, that's cute and all, peer A, but you're wrong, right? That's not right. Now, it might be a little abstract. That should just look at data and us typing kind of random.

stuff in here and think, Okay, yeah, that's data, right? That makes sense. You know, it's just kind of random strings in here. It doesn't really do anything for us. So, if we actually go over to the Token section here, this is where everything really starts to make a lot of sense. So, we have the exact same setup here with pure A, pure B, tier C, except the difference is instead of having kind of this data section, we have this TX, this transaction section, right? And this represents all the transactions that are happening in this block, right? So, we're sending 25 from Darcy to Bingle or to Bingley, force 4.27 cents here, 1922, right? And it's the exact same thing. So, all these transactions are going to get hashed in the exact same way that the data is going to get hashed. And this is why it's so powerful because, again, you know, if I want to be malicious, right? If I want to say, Hey, I really wanted to give

Jane a lot more money from Elizabeth, so I'm pure, and I go back, and I change it to 100. Well, now you know not only do I, does my whole blockchain get invalidated because that was so far, so long ago, but I'm not going to match any of these other chains, right? And so my blockchain is going to be excluded from the overall blockchain. So, and let's go ahead and fix this, and it's the same thing if down here, if I become malicious and I want to send, you know, I want Miss Audrey to have less money. Maybe I want to send a dollar and then go ahead and mine it. The same thing here, this hash now, this 2a1, is not going to match your B's, if your B's hash of BBA, and it's not going to match Piercy's hash of BBA as well. So the two of them are going to say, Hey, this your blockchain is invalid. It's not matching the majority, you know, you're out, right? So that's really how these blockchains

work at a low level, and it all goes back to this understanding, this hash idea, and using it in this very sophisticated manner to kind of cryptographically prove, um, you know, where stuff lies. Now, the way the blockchain works is, yeah, instead of random stuff put in this data section, it's actually going to be Solidity code in here and finding ways to interact with different blocks and different protocols that are on-chain or, as we've said before, different smart contracts. Now, the next question that you might be asking is, okay, well, how do I know, how can I be sure that I'm the one, uh, you know, let's say this is, let's say I'm Darcy, right? How can I be sure that I was, that Darcy was the one to actually send this money here? How do we know that Darcy sent 25 to, uh, Bingley? Well, this is where we get into, uh, private keys and public keys, and that's what we're going to go into now. Let's just do a quick recap of what we've

learned in this section so far. Right, we've learned that Ethereum actually runs on this kit check 256. But you know, we used shot to vid6 for this demo. It doesn't really matter. We're just talking about hashing algorithms. So again, a hash is a unique fixed-length string meant to identify any piece of data. A hash algorithm or a hash function is a function or algorithm that computes any type of data into a unique hash. Mining is going to be the process of finding the solution to the blockchain problem. In our example, the problem was finding a hash that starts with four zeros. Nodes get paid for mining different blocks, and the problem is going to be different blockchain to blockchain. A block in a blockchain is basically a combination of a block nonce, transaction, and previous hash to create this unique hash for this block. And again, depending on the blockchain implementation, this might have a couple of other fields or might have different fields, but this is essentially what's going on. Blockchains are decentralized and distributed because many independent users are going to run this blockchain.

software, and it will check, and they will compare against each other to see which blockchains are acting honestly and which ones are acting maliciously in the blockchain world. Majority rules the nuns. Here is the answer used, or the number used to get this hashing. Now, nuns is kind of an overloaded term. It's actually used for a number of different reasons. In this case, we're using it to solve this problem of getting, you know, four or five zeros at the stop Urban hash. However, in Ethereum, it'll also be often used as the number of transactions from a given address.

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Understanding Hashing and Mining in Blockchain

Hashing algorithms, like SHA-256, produce unique fixed-length strings that identify data, with the hash changing based on the input.

Miners solve the problem of generating a hash with a specific pattern (e.

, four zeros) through brute force, while different blockchains have varying problems for miners to solve.

The last hash in a blockchain block encompasses the hashes of all previous blocks, creating a decentralized and synchronized network of independent users.

Hashing generates a unique fixed-length string for any piece of data, with the example of "Patrick Collins" consistently producing the same hash.

The concept of a block in the blockchain involves splitting data into block nonce and data, with the first block known as the Genesis block.

The hashing algorithm plays a crucial role in determining the block's hash, and the SHA-256 hash function is commonly used, with Ethereum employing a similar hashing algorithm.

Blockchain consists of multiple blocks, each with a unique nonce, data, and a reference to the previous block's hash.

Mining involves solving a difficult problem to find a valid nonce, which changes the block's hash and can take time.

The immutability of the blockchain is ensured by the interconnectedness of the blocks; changing one block's data invalidates the entire chain.

Understanding Blockchain Mining and Blocks

Blockchain mining involves finding a nonce that solves a computational problem, with the goal of creating a unique hash for a block.

The process is decentralized and distributed, with independent users running the blockchain.

When a change is made to the blockchain, it can invalidate the subsequent blocks, leading to a race to catch up and establish a valid chain.

Understanding Blockchain and Its Decentralized Nature

Blockchain technology uses a sophisticated hashing method to cryptographically prove the location of data.

It operates through Solidity code, interacting with different blocks and smart contracts on-chain.

The decentralized nature of blockchain, with multiple peers having equal power, makes it difficult to change past data, providing a secure and reliable system for transactions.

The Role of Peer Comparison in Blockchain

Blockchain networks use peer comparison to identify honest and malicious actors.

The term "nuns" is used to refer to various factors, such as transaction counts and hash calculations, to maintain decentralization and enforce majority rule.

When a peer attempts to manipulate the blockchain, the majority of peers can invalidate their actions and exclude them from mining rewards, ensuring the integrity of the network.