What is Blockchain?

Blockchain is a distributed database that maintains a continuously growing list of data records that cannot be tampered with. It was the main technical innovation behind Bitcoin, and it is used as a public ledger of all transactions made with Bitcoins.

Blockchain consists of several blocks that are linked with each other, with each block linked to its previous block. Each block consists of a batch of timestamped transactions and a hash of the previous block. As the blocks are linked, they form a chain, hence the name of the database.

How is Blockchain used in Bitcoin?

When two people want to exchange Bitcoin, the owner of the Bitcoin has to digitally sign the transaction using his secret key, so that the transaction cannot be tampered with. Also, the payee has to ensure that the Bitcoin is not spent earlier by the owner.

Using a central authority can be an easy solution to this problem. But Bitcoin is a decentralized digital currency. No single institution controls the Bitcoin network. So, Bitcoins use blockchain for this purpose.

In Bitcoin, a blockchain consists of several blocks linked together, each containing timestamped valid Bitcoin transactions and a hash of the previous block. When a node joins the Bitcoin network, a copy of the blockchain is automatically downloaded.

When two people exchange Bitcoins, an encrypted transaction record is sent to all other nodes in the Bitcoin network. Each node validates and relays transactions. So, when the encrypted record of the transaction is sent, the other nodes verify the transaction by performing complex cryptographic calculations on the record and notify one another in real-time. When a majority of the nodes agree with the authenticity of the transaction, the transaction is added to the ledger.

A Bitcoin consists of a chain of digital signatures. It contains the hash of the previous transaction, the public key of the next owner, and the signature of the current owner. A payee can verify the signatures to verify the chain of ownership.

When new transactions are broadcast to all nodes, each node collects them in a block. Each block uses the hash of the previous block, a nonce (a 32-bit value), to calculate the hash of the new block with the required zero bits.

All the nodes verify the transactions present in the block and notify one another about their acceptance. When the majority of the nodes agree, the next block is created.

Please note that Bitcoin transactions are maintained using a Merkle Tree (What is a Merkle Tree?). Only the root of the Merkle Tree is included in the block’s hash.

How is Blockchain used in Digital Signatures?

A digital signature is usually made using the owner’s private key. Whoever wants to verify the …