By its design, blockhain is storing the data in a decentralized manner by sharing the same copy of the blocks with all the miners that participate to the process.
dCipher delivers a complete range of services in this area, starting from decentralized applications, similar to existing web based mobile apps, and continuing with private blockchains developed on existing protocols, but customized in order to serve the business’s specific needs.
Blockchain technology enables connecting, storing and controlling the data online, in a decentralized, trustless and secure way, and all this is done by sharing the same copy of information blocks between all the miners who take part in the process.
All the blocks are locked with a unique signature, the result of a mathematical process. In order to generate the next block signature from the chain, the current one will use the Merkle root, hashes from current block transactions, along with the previous block signature, timestamp and, among a other things, a nonce, which is a complete random number generated once.
Thanks to this unique design in generating the chain of block signatures, the data locked in every block cannot be altered or modified without the incident result of invalidating all the other informational blocks. This way, the miners are in full control over the information and they can identify security breaches or an outsider’s intervention in real time.
Having this architecture, a blockchain is hard to break or almost impossible to corrupt. Nevertheless there are a few ways for the network security to be altered, such as the 51% attack for Proof of Work protocol, but at the current rates of mining power for both Ethereum and Bitcoin, this would be quite expensive for the attacker to do.
dCipher’s role is either to cope with the existing protocols by running a test and undergoing an audit, and to develop on top of it, but also to develop from scratch new types of protocols, in order to put in place specific functionalities required by our clients.
Proof of Work Protocol is currently the most common protocol type and so far, the most secure one used for getting consensus on blockchains. In this type of protocol, the miner will need to solve a mathematical problem in order to generate the nonce, before being able to add the block to the ledger. This solution will be shared with the other miners, in order for them to also validate the block copy before adding it to their copy of the ledger.
The version of the chain that carries the greatest amount of work, so most miners agree on that "version of truth", will create the longest chain of blocks. It rarely happens for two miners to generate simultaneously two different blocks. In this case we will have two versions of the blockchain, both true and valid. In this scenario, randomly, the next miner will chose a chain, which will become the longest one, making the other block invalid. This block will be rejected as an "Orphan" block in the Bitcoin network and it will not be rewarded, but on the Ethereum network this will be transformed into an "Uncle" block, and it will be rewarded with amounts between 1.5 and 3 ETH.
That being said, we can conclude that the two major functions of the PoW protocol are:
This type of algorithm is based on validators and their key role is to commit new blocks on the chain and to validate it. For each validated transaction they will receive fees, which, in most cases are the sum of the transaction fees, plus, in some cases, a fix amount (in case the block is empty). Unlike the PoWP, the Proof of Stake Protocol algorithm uses significantly less resources to operate, and runs like a Decentralized Autonomous Organization (DAO), on a public blockchain.
The Ethereum public blockchain will also have in the future a PoS algorithm, which is currently under development, called Casper. This will provide a virtual machine in order to perform peer-to-peer controls, votings and rejections, thanks to its stake in the native cryptocurrency Ether.
It is important to note that PoS cryptocurrencies solve the long lasting energy efficiency problem of the PoWP algorithms.