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Five Main Principles Behind Blockchain Technology Part 7

Immutability of records

 

A transaction on a blockchain network has one confirmation when a block of the blockchain contains the data about the transaction.

However, this does not mean that a wallet on a network would accept the transaction as “valid.” On the Bitcoin network validity is often defined as six confirmations. On other networks, validity may require more confirmations. Providers of services that accept cryptocurrencies are free to set their own requirements for the number of confirmations. For example, a cryptocurrency exchange could wait for 20 to 40 confirmations before allowing users to trade funds on the exchange.

 

Blocks and hashes

How can multiple blocks contain information about the same transaction? The answer is simple: blocks of blockchains are connected via cryptography hashes. In cryptography, a hash is a string of data that is typically much shorter than the data itself. Also, a set of data will always have the same hash under the same cryptography algorithm. For example, in a cryptography algorithm called CA, the set of data (1, 2, 3, 4, 5, 6 , 7) could have a hash Qw2. It works in the same way on blockchain networks, it is just that on a network such as Bitcoin the scale of the data in the data sets will be larger and the hashes will be much longer compared to the example above.

For instance, block #527170 of the Bitcoin blockchain contains data about 1244 transactions, all of which you can see on the page of the block here https://blockchain.info/block/00000000000000000014c98d7d8394fe9d9c9b5c0badca4ac965c49a5e739d06 yet the hash for all the data about all the transactions is just 00000000000000000014c98d7d8394fe9d9c9b5c0badca4ac965c49a5e739d06.

One of the properties of cryptography hashes is that when you have the actual data and have access to the cryptography software, you will always get the same hash but if all you have is a hash, the only way to use it is for verification purposes. You can’t recreate a set of data if all you have is the hash even when you know the name of the cryptography algorithm. Using the example above, if all you have is 00000000000000000014c98d7d8394fe9d9c9b5c0badca4ac965c49a5e739d06, there’s no way for you to recreate the data in the form you will see it here: https://blockchain.info/block/00000000000000000014c98d7d8394fe9d9c9b5c0badca4ac965c49a5e739d06

 

 

The innovation of blockchain

Cryptography and cryptography hashes have existed long before blockchains. For example, the Bitcoin network uses cryptography algorithm called SHA-256. SHA-256 is a part of SHA-2, which is a set of cryptography functions that the United States National Security Agency has designed in 2001, eight years before Satoshi Nakamoto has launched the Bitcoin network.

The innovation of blockchain technology is how it uses cryptography and cryptography hashes. On the Bitcoin blockchain, every block other than the very first block of the blockchain, which was block #0, the page for which you can see here https://blockchain.info/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f , contains the hash for the previous block. The data with the hash for the previous block is mandatory on the Bitcoin blockchain. The very first block, block #0, had 0000000000000000000000000000000000000000000000000000000000000000 as the previous block hash, as you can see if you use the link for the page of the block provided above.

If someone were to change something in a block of the blockchain, this block would have a very different hash from the unedited block. Because of this, the block with the new hash would not fit into the original blockchain. This is how blockchain networks connect blocks and this is partly why blockchains are so secure.

The previous sentence contains the word “partly” because creating a cryptography hash is a very simple task for almost any computer, including a lot of laptops and desktops that people all over the world use to perform daily tasks. While it would be not possible for someone with a regular computer or any other computer, for that matter, to edit a transaction on the existing blockchain because of the blocks being connected with hashes, if hashes were the only security element and the Bitcoin blockchain did not use proof-of-work consensus algorithm and the parameter of difficulty, someone could edit a transaction on a blockchain network and then create a whole new blockchain.

However, with proof-of-work and the changing parameter of difficulty, the creation of multiple blockchains is simply not possible.