This post is a continuation of what we discussed in 4.1 (If you missed it, you can read it here). We ended that instalment with a scenario. Let’s quickly recap and then move on to explain the consensus protocol.
The scenario:
Say for example a dispute arise between Eve and Peter regarding the ownership of a piece of land that has been in the family for years. They made use of blockchain technology where there is an entry recorded in the ledger which shows that Adam originally bought the property in 1900 from Mary.
When Adam sold the property to Stephen in 1932, a new entry was made in the ledger, and so on. Every change of ownership is represented by a new entry (block) in the ledger (blockchain), right up to Eve who bought it from James in 2008. Eve is the current owner, and is stored in the ledger. The dispute has been resolved.
If we continue with our example from Figure 1, the “first” block (original owner, Mary), is called the Genesis block. When Adam bought the land from Mary, a new block is created, Block 1. Block 1 contains all the data of this transaction, together with the hash value of the genesis block. When Adam sells the land to Stephen, a new block is created which contains the content of the new transaction, together with the hash value of block 1, but it also creates its own hash value for block 2. The same process repeats itself when Stephen sells to James (block 3) and then when James sells to Eve.
Okay, you’ve got it: blocks of information linked in a chain. What we still need to get to is why this particular system is so trustworthy and ‘tamper-proof’, as they say.
Consensus Protocol
The answer is simple – blockchain makes use of a consensus protocol. If we have consensus as a sailing crew, then we all agree on the route we will take, so consensus is agreement and mutual approval. The blockchain establishes an agreement between all the participants in the network to determine who in the network is allowed to append a block to the chain.
Since blockchain is based on DLT, a copy of this blockchain-style ledger is distributed across multiple devices in the blockchain network, providing each device with its own copy.
When Peter heard that Eve was the true owner of the piece of land, he tried to maliciously change the ledger to show that he bought the land from James instead. This change to the ledger is recorded, but it caused the hash value of block 4 to change, which results in a new hash value. These changes in the hash will permeate through the entire blockchain network.
Since we distribute the ledger through the entire network, the changes cannot be verified by the nodes in the network, and the network will detect an illegal “edit” and will discard any changes. All the devices (called nodes) need to reach consensus before adding new blocks.
A consensus system [3] is an agreed set of network rules, and since every node abides by them, they become self-enforced inside the blockchain. This consensus system acts as a second layer of protection to the blockchain.
They say that a chain is only as strong as its weakest link. We say that the consensus system checks every single link multiple times a day to ensure that there is no ‘weakest link’ in the blockchain. This is what makes blockchain technology an inherently trustworthy improvement on many of our traditional data and financial management systems.
** ** This was Part 2 of an explanation of blockchain technology. In the next instalment of our series we will explain the difference between public (permissionless) and private (permissioned) blockchains. The rest of the series will be published on medium.com and on our website.
References:
[3] Redka, M., 2021. The Future of Blockchain: Potential Use and Global Impact. [Online] Mlsdev.com. Available at: <https://mlsdev.com/blog/the-future-of-the-blockchain-technology-use-cases-geographical-expansion-potential-risks-and-challenges> [Accessed 22 June 2021].
