What are the different types of Blockchains?
The different types of blockchains which introduce to the world are:
There are mainly three types of Blockchains introduced to the world.
1. Public Blockchain
A Public blockchain is a kind of blockchain which is “for the people, by the people, and of the people.” There is no in-charge it means anyone can read, write, and audit the blockchain. It is an open-source, distributed, and decentralizes public ledger so anyone can review anything on a public blockchain. They are considered to be Permissionless blockchain.
2. Private Blockchain
A Private blockchain is a private property of an individual or an organization. It is controlled by a single organization that determines who can read it, submit the transaction to it, and who can participate in the consensus process. They are considered to be permissioned blockchain.
3. Consortium Blockchain or Federated Blockchain
In this blockchain, the consensus process is controlled by a pre-selected group, i.e., group of companies or representative individuals. These pre-selected group is coming together and making decisions for the best benefit of the whole network. Such groups are also called consortiums or a federation that’s why the name consortium or federated blockchain.
Why is Blockchain a trusted approach?
Blockchain is a trusted approach due to the following reasons:
- It is easily compatible with other business applications due to its open-source nature.
- It is safe, hacking proof and encrypted.
- There is no central authority to control it.
- All participants agreed to how a transaction inserted into the blockchain.
- The transaction is immutable means once the transaction inserted into the blockchain, we cannot change it.
Every block of Blockchain consist of what elements?
Every block must include these three things:
- A hash pointer to the previous block
- Timestamp
- List of transactions
What is encryption? What is its role in Blockchain?
We know that the security of data is always matters. Encryption is a process of converting information or data into a code to prevent unauthorized access. It helps organizations to keep their data secure(i.e., prevent unauthorized access). In this technique, the data is encoded or changed into an unreadable format up to some extent before it is sent out of a network by the sender. The only receiver can understand how to decode the same.
In Blockchain technology, this approach is very useful because it makes the overall security and authenticity of blocks and help to keep them secure.
Which cryptographic algorithm is used in Blockchain?
Blockchain uses SHA-256 Hashing algorithm. The National Security Agency (NSA) in the USA develop SHA-256 Hashing algorithm.
What is Consensus algorithm?
The consensus algorithm is the method of gaining consensus on a change of data over the system or distributed network. Consensus algorithms are heavily used in blockchains as they enable the network of unknown nodes to reach consensus on the data that is being stored or shared through the blockchain.
Where is a blockchain stored?
The blockchain can be either stored as a flat file or as a database.
What is mean by DAO?
The DAO stands for Decentralized Autonomous Organization. It is an organization that is both autonomous and decentralized. It is represented by rules encoded as a computer program that is transparent, controlled by shareholders, and not influenced by the central government.
A DAO can be seen as the most complex form of a smart contract. A smart contract is a computer program that autonomously exists on the Internet, but at the same time, it needs people to perform a task that it can’t do by itself.
A DAO’s financial transaction record and program rules are maintained on a blockchain. Since DAO runs on a blockchain, and it’s running on a distributed network, you can have multiple combinations of different parties exchanging value and reaching agreements. It means that, to a Decentralized Autonomous Organization, it doesn’t matter if you are a human being or you’re a robot. You can actually have devices communicating with devices, or devices communicating with people, or people communicating with people. To DAO, it makes no difference because as long as it’s programmed into the collection of smart contracts, the whole thing can run automatically and immutable.
How does a block is recognized in the Blockchain approach?
Each block in the blockchain consists of a hash value. The hash value acts as a link to the block which is before it, transaction data and in fact a stamp of time.
What is the difference between Proof-of-work and Proof-of-stake?
The main differences between the Proof of Work and Proof of Stake are:
Proof of Work
Proof of Work(PoW) algorithm is used to confirm the transaction and creates a new block to the chain. In this algorithm, miners compete against each other to complete the transaction on the network. The process of competing against each other is called mining. It defines an expensive computer calculation. In this, a reward is given to the first miner who solves each blocks problem.
Proof of Stake
In the case of PoS algorithm, a set of nodes decide to stake their own cryptocurrencies for the transaction validation. They are called ‘stakers.’ In proof of stake, the creator of a new block is chosen in a deterministic way, depending on its wealth, also defined as stake. It does not give any block reward, so miners take the transaction fees only. Proof-of-Stake can be several thousand times more cost-effective as compared to proof of work.