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Peer-to-peer network


The blockchain is maintained by a peer-to-peer network. The blockchain uses a special kind of network called “peer-to-peer network” which partitions its entire workload between participants, who are all equally privileged, called “peers”. There is no longer one central server, now there are several distributed and decentralized peers.

One of the main uses of the peer-to-peer network is file sharing, also called torrenting. If you are to use a client-server model for downloading, then it is usually extremely slow and entirely dependent on the health of the server. Plus, it is prone to censorship.

However, in a peer-to-peer system, there is no central authority, and hence if even one of the peers in the network goes out of the race, you still have more peers to download from. Plus, it is not subject to the idealistic standards of a central system, hence it is not prone to censorship.

If we were to compare the two:

Traditional Centralized Downloading

  • Slow
  • Single point of failure
  • High bandwidth usage for the server

Decentralized Peer-to-peer Downloading

  • Fast
  • No single point of failure
  • All downloader are also uploaders

The decentralized nature of a peer-to-peer system becomes an idea of combining this peer-to-peer network with a payment system that has completely revolutionized the finance industry by giving birth to cryptocurrency.

What is Blockchain Technology?


The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater, and the main question every single person is asking is: What is Blockchain?

It is a digital ledger that keeps a record of all transactions taking place on a peer-to-peer network. All information transferred via blockchain is encrypted and every occurrence recorded, meaning it cannot be altered. It is decentralized, so there’s no need for any central, certifying authority. It can be used for much more than the transfer of currency, contracts, records and other kinds of data that can be shared. Encrypted information can be shared across multiple providers without the risk of a privacy breach.

Blockchain - Chaining Blocks


The blocks created by various miners are chained together to form what is known as a truly distributed public ledger

Each block in the chain contains multiple messages (transactions) as seen above. A block in the chain may come from any miner. While creating the chain of blocks, we observe the rule that the hash of the previous block is added to the current block.

Thus, a miner while creating the block picks up the hash of the last block in the chain, combines it with its own set of messages and creates a hash for its newly created block. This newly created block now becomes the new end for the chain and thus the chain keeps on growing as more and more blocks are added to it by the miners.

Nodes


A node is a device on a blockchain network, that is in essence the foundation of the technology, allowing it to function and survive.  Nodes are distributed across a widespread network and carry out a variety of tasks.

A node can be any active electronic device, including a computer, phone or even a printer, as long as it is connected to the internet and as such has an IP address. The role of a node is to support the network by maintaining a copy of a blockchain and, in some cases, to process transactions. Nodes are often arranged in the structure of trees, known as binary trees. Each cryptocurrency has its own nodes, maintaining the transaction records of that particular token. 


A full node downloads a complete copy of a blockchain and checks any new transactions coming in based on the consensus protocol utilized by that particular cryptocurrency or utility token. All nodes use the same consensus protocol to remain compatible with each other. It is the nodes on the network that confirm and validate transactions, putting them into blocks. Nodes always come to their own conclusion on whether a transaction is valid and should be added to a block with other transactions, irrespective of how other nodes act.

What are Pros of Lightning Network?


It’s a long term solution to the scalability problem. Other platforms – like Bitcoin Cash – have made changes to bitcoin which they think solve the scalability problem. However, their solutions tend to be short term. If the network is ever going to be truly scalable, then it will come in the form of a project like the lightning network. A few other suggested solutions are big enough to fix the problem completely.

Micropayments mean micro fees. The lightning network could solve bitcoin’s second-biggest problem which is high fees. When it was created, bitcoin promised super-fast transaction and low or no fees. So far, it hasn’t delivered. But with the lightning network, it might be able to shortly.

The lightning network gives users more control. The main bitcoin blockchain is largely controlled by miners. Miners use very powerful and expensive equipment to complete the tasks involved in processing transaction. On the lightning network, nodes can be run by anyone; on laptops, home PCs and (one day soon) mobile phones. Bitcoin was designed to include everyone and that’s exactly what the lightning networks want to do.