Blockchain in 2 minutes | Karthikeyan Veeran

What is mean by DAO?

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.

Storing Data in a Blockchain

Storing Data in a Blockchain A blockchain handles data differently than a traditional database. One of the biggest differences is that a blockchain does not support CRUD operations. The only database operations are Write, which is the same as Create, followed by populating data before writing, and Read. After data has been placed in a block and added to the blockchain, that data cannot change. A blockchain does not have Update and Delete operations. The other big difference between blockchain data storage and databases is their location. A complete copy of the blockchain is stored on every full blockchain node. Much of the difficulty in maintaining a blockchain network is ensuring that all blockchain nodes store the same data. Each blockchain implementation has strict rules for maintaining a synchronized blockchain across the network, and those rules make detecting differences between nodes easy (and quick). This distributed storage property of a blockchain makes it extremely resilient, because the failure of any node or nodes will have a negligible effect on the rest of the blockchain network. Blockchain storage was never designed for high-performance situations. The storage method does support fast traversals through the block tree, but accessing individual data items within blocks takes some time. Remember that blocks can contain data in different formats, which must be filtered for searching.

Making Blocks Immutable. Possible ?

Making blocks immutable The reason why so much effort is put into ensuring consensus is that after a block is added to the blockchain, it never changes. Well, that’s the goal. Technically, it is possible to change blockchain data, but it is very, very hard to do and very easy for anyone to detect the change. Using POW consensus protocol, the level of effort alone makes changing blocks pretty close to impossible. Let’s understand why. So, Before you add a block to the blockchain, you must calculate a cryptographic hash of the previous block. That is the link to the previous block and the guarantee that it will never change. When you calculate the hash value of the previous block, that block’s header (which is part of the data used to calculate the hash value) includes the hash of its predecessor block. So if anyone ever changes any block, all blocks in the blockchain after that one are invalid. They’re invalid because the hash values for all subsequent blocks don’t match up. It is easy to validate a blockchain. All you have to do is step through the blockchain, block by block, and make sure that the hash value stored in each block is the correct hash of the previous block header. As long as all the hashes match, the blockchain is valid. That’s why blockchains are called immutable. You can change blockchain data, but doing so immediately invalidates that copy of the blockchain.

What is Proof of Stake (PoS) ?

Proof of Stake: The Proof of Stake (PoS) consensus protocol will likely replace Proof of Work. The developers of Ethereum already have plans to move to this protocol. The Proof of Stake protocol provides a similar level of consistency as the current Proof of Work protocol without using so much computing power (and wasting energy). Each node that wants to compete to add a new block locks some of its cryptocurrency and submits it as a bet. The “winning” node that gets to add the new block to the blockchain is chosen based on the size of the bet and other criteria intended to randomize the selection. The random part of the selection criteria keeps the richest node from always adding new blocks. 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.

What is Proof of Work ?

Proof of Work: Proof of Work (PoW) use lots of energy and is the most popular consensus protocol used today, and is used by both bitcoin and Ethereum. Proof of Work means that some nodes compete to try to be the first to solve a mathematical puzzle. The puzzle is to find a random value to combine with a block’s header, such that the hash of the combined data matches a pattern. Solving the puzzle is hard, but verifying the solution to the puzzle is easy. The first node to solve the puzzle receives a reward for doing the work, and gets to add the new block to the blockchain. The block, along with the value the winning node found to solve the puzzle, is sent to all nodes. Each node quickly verifies the block and then adds it to their local blockchain. Although Proof of Work is the most popular consensus protocol and works well, it takes enormous computing power to complete. That means Proof of Work requires computers to use lots of energy, which produces a lot of heat.