A blockchain is a system in which a record of transactions, especially those made in a cryptocurrency, is maintained across computers that are linked in a peer-to-peer network.
It is also a decentralized and distributed network of computers.
The word “decentralized”, means that it’s not being controlled by a single person, everyone on the network has the same rights.
Imagine a scenery where Victoria, Joy, and Elisabeth are in a network. Victoria is like the leader of the park, she shares and distributes information to Elizabeth and Joy.
Peradventure, Victoria’s Computer crashes, what do you think would happen to that network? Because it’s a centralized network, information sharing would have to halt until Victoria fixes her laptop or gets a new one.
Whereas, in a decentralized network where no one is in charge, they share and exchange the same piece of information in real-time using their computers. If something happens to Victoria’s computer, the network will keep running because the network does not depend on just one person to stay alive.
This is why they say the more people come into a blockchain the more stronger and likely to succeed.
Types of Blockchains
Public Blockchains
Public blockchains are open and decentralized networks. They allow anyone to participate, view, or validate transactions. They offer transparency and security by allowing anyone to join the network, make transactions, and help maintain the blockchain. Public blockchains would be the focus of this article as that gives you a base knowledge of what to expect from the other types of blockchains.
Example Use Cases:
Cryptocurrencies like Bitcoin and Ethereum
Decentralized applications (DApps) and smart contracts
Transparent and secure record-keeping for global transactions
Consortium/Hybrid Blockchains
Consortium or hybrid blockchains are semi-decentralized. They are controlled by a group of trusted entities. Unlike public blockchains, access to these blockchains is restricted to a specific group of participants. This type of blockchain offers a balance between the openness of public blockchains and the control of private blockchains.
Example Use Cases:
Supply chain management among a group of partner companies
Financial transactions within a consortium of banks
Voting systems for organizations or governments
Fully Private Blockchains
Fully private blockchains are centralized and operated by a single entity or organization. Access to these blockchains is restricted, and they are typically used within organizations or specific closed ecosystems. Fully private blockchains provide control and privacy over data and transactions but sacrifice some of the decentralization and transparency found in public blockchains.
Example Use Cases:
Internal record-keeping and data management within a company
Secure and private sharing of sensitive information within a healthcare network
Tracking and managing assets within a specific enterprise or company.
Key Components of a Blockchain Network:
Peer-to-Peer (P2P) Network: A peer-to-peer network connecting participants and propagating transactions and blocks of verified transactions, based on a standardized “gossip” protocol. A gossip protocol is a method used for communication and sharing of information in a decentralized network. When one person shares a piece of information with a few others, those people then share it with others, and the information gradually spreads throughout the network.
Messages and State Transitions: Messages also known as transactions, represent state transitions. A set of consensus rules governs what constitutes a valid state transition. A state machine processes transactions according to the consensus rules. These elements collectively facilitate the accurate recording and validation of state changes within the blockchain.
Cryptographically Secured Blocks: A chain of cryptographically secured blocks that acts as a journal of all the verified and accepted state transitions. This chain ensures the immutability and transparency of all transactions and state changes within the blockchain.
Decentralized Consensus Algorithm: This algorithm forces participants to cooperate in the enforcement of the consensus rules. A fair and strategic reward system (e.g., proof-of-work in Bitcoin, proof-of-stake in Ethereum, etc) to ensure the security and integrity of the blockchain network by incentivizing honest participation and consensus among its participants.
Open Source Software Implementations: One or more open-source software implementations of the above components — they are known as (“clients”). These software clients allow users to interact with the blockchain network, enabling them to create transactions, validate blocks, and participate in the consensus process.
Introduction to Web3
Web 3.0 or Web3 refers to the third generation of the internet, which is decentralized and built on blockchain technology. It aims to create a more transparent, secure, and user-centric web experience by enabling direct peer-to-peer interactions without the need for intermediaries.
Decentralized Applications(Dapps)
A DApp is an application that is built on top of open, decentralized, peer-to-peer infrastructure services.
The emergence of decentralized platforms such as Ethereum, Solana, Avalanche, and others marked a significant departure from the traditional approaches seen in Bitcoin and most Proof-of-Work (PoW) blockchains, introducing new paradigms in blockchain technology.
A DApp is composed of at least:
Smart contracts on a blockchain
A web frontend user interface
Difference Between Web2 and Web3
Web2
Centralized Control: This is when users' data and interactions are mediated and monetized by a few leading platforms.
Intermediaries: Intermediaries such as social media platforms, search engines, and e-commerce sites play a pivotal role in governing digital interactions and content distribution.
Limited User Ownership: Users have limited ownership and control over their data, often leading to privacy concerns and data exploitation.
Traditional Business Models: Business models primarily rely on advertising revenue and user data monetization, leading to potential privacy and security issues.
Web3
Decentralization: Web3 aims to reduce reliance on intermediaries and empower users with more direct control over their data and digital interactions.
Blockchain Technology: Web3 leverages blockchain technology and decentralized protocols to enable peer-to-peer interactions and programmable transactions.
User Sovereignty: Users have greater control over their data and digital identity, fostering a more transparent and secure online environment.
New Economic Models: Web3 introduces new economic models such as decentralized finance (DeFi) and non-fungible tokens (NFTs), fundamentally reshaping value creation and exchange on the internet.
If you are looking to get into developing decentralized applications, platforms like Ethereum, Solana, or Avalanche are a great way to start. They have great developer communities that would be willing to give a helping hand when you need one.