Summary

In this chapter, I continued covering some of the fundamental building blocks and core concepts of the blockchain—blocks, chains, and some of the existing consensus algorithms.

In the section about blocks, I covered what a block actually is, how it compares with pages in a book, and told what is stored in such a block. You then learned what the structures of different types of blocks are, including its block header, and then studied how blocks are hashed and how the nonce is calculated that is needed to generate the correct target hash.

I continued covering the fundamentals by explaining how blocks are chained together to form the actual blockchain and how these blocks are distributed to all nodes in the decentralized network using a managed peer-to-peer protocol. I went through the process of how nodes can detect that the content of a block is maliciously modified. I explained that this same process can also detect accidental forks in the chain, which happens when multiple block are created with the same block height.

I concluded the section about chains by covering the difference between a soft fork and a hard fork, and how such forks in a chain can occur. Finally, I explained that when your blockchain grows over time, the network may want to try out different rules but not affect the main chain. This can be done using a sidechain (that is, independent ledger). Most sidechains are developed to enhance scalability or transferability among chains. In this section, you studied how the underlying mechanisms of sidechains work.

Finally, you learned about the four main consensus methods that are currently available to validate transactions and create and verify blocks in a blockchain. At the end of the chapter, I reflected back on what was covered and linked all of the pieces together by explaining how consensus solves the trust issue that exists with traditional transactions. For each consensus method or algorithm, I addressed five questions concerning authorization, privacy, and data integrity.

In the next chapter, you will learn about the security and privacy aspects of the blockchain, and how you can use smart contracts to delegate work automatically to participants in the network.