We will look into the core technical components of blockchain technology: distributed ledgers, cryptography, hashing, and digital signatures, based on the provided sources.
Distributed Ledger Technology (DLT): A ledger is a continuously growing record of transactions. Unlike centralized ledgers controlled by a single party, decentralized ledgers are held by multiple parties, and distributed ledgers see every node verifying transactions to reach consensus. Blockchain is a type of decentralized digital ledger, known for being transparent, immutable, and tamper-resistant. New blocks (transactions) are added chronologically, and altering past blocks is computationally infeasible as it would change subsequent hashes and be rejected by the network.
Cryptography: This is the science of securing data. Asymmetric cryptography (public-key cryptography) is fundamental to blockchain, using a pair of keys: a public key for encryption/verification and a private key for decryption/signing. The private key is kept secret, while the public key is shared. Algorithms like RSA, DSA, and Elliptic Curve Cryptography (ECC) are used. This method solves the key distribution problem and enables digital signatures. Symmetric cryptography uses a single key for both encryption and decryption and is simpler but less secure for key exchange.
Hashing: A hash function converts data of any size into a fixed-size output (a hash or digest). Key properties include fixed length output, determinism (same input always yields same output), pre-image resistance (hard to get original data from hash), collision resistance (hard to find two different inputs with the same hash), and efficiency. Even small changes in input drastically alter the hash (avalanche effect). SHA-256 is a prominent hash function used in Bitcoin.
Digital Signatures: These ensure data integrity and authenticity. A digital signature is created by hashing a message and then encrypting the hash with the sender's private key. The recipient verifies the signature by decrypting the encrypted hash with the sender's public key and comparing it to a new hash of the received message. Matching hashes confirm the message's integrity and the sender's identity. ECC provides strong security for digital signatures.
Blockchain Mechanisms: In a blockchain, transactions are grouped into "blocks." When a transaction occurs, a block is created and broadcast to network nodes. Nodes validate the transaction (often via Proof-of-Work), and the validated block is added to the existing chain. Decentralized blockchains are generally immutable, meaning records are permanent.
Merkle Trees: This is a tree structure where leaf nodes contain data hashes, and higher nodes contain hashes of their child nodes' hashes. The root of the tree is the Merkle root. Merkle trees allow for efficient and secure verification that a specific data block is part of the ledger by checking only a small number of hashes, rather than the entire chain. They are used in systems like Bitcoin and Ethereum.
Digital Certificates: Similar to an ID, a digital certificate contains an individual's or organization's public key and is signed by a trusted Certificate Authority (CA). CAs validate identities and issue these certificates, which bind a public key to an entity and contain information like key usage. They are managed in certificate stores.
In conclusion, blockchain technology relies heavily on these cryptographic principles and data structures to create secure, transparent, and immutable distributed ledgers. Asymmetric cryptography, hashing, digital signatures, and Merkle trees work together to ensure the integrity and authenticity of transactions within a decentralized network.
