Understanding Blockchains: A Deeper Dive
Now that you’ve dipped your toes into the world of WEB3, let’s take a closer look at the backbone of decentralized technologies: Blockchains. Think of Blockchains as the digital ledger that powers the future of transactions, security, and innovation.
Dive into the World of Possibilities of Blockchains
A blockchain operates as a decentralized, tamper-resistant ledger that forms a chain of blocks. Each block contains a list of transactions. When a participant initiates a new transaction, it is broadcasted to a network of nodes. These nodes collectively validate and verify the transaction through consensus mechanisms. Once approved, the transaction is grouped with others into a block.
Each block contains a unique identifier (hash) and a reference to the previous block, forming a chronological chain. To add a new block, consensus must be reached, ensuring agreement among nodes. This cryptographic process, enhances security and immutability, making it extremely difficult to alter historical transactions. As a result, a blockchain evolves by appending new blocks sequentially, creating a transparent, decentralized, and trustworthy record of transactions.
Blockchain explorers
Every verified transaction becomes part of the blockchain. The most blockchains (exceptions are there) are fully transparent. That means by design you can see from every block which verified transactions are inside. For you and I, to be able to see inside the blocks, we need blockchain explorers. These websites are publicly available and show all the information involving that blockchain. For example, Ethereum has Etherscan, Polygon has Polygonscan etc. Most Block explorers offer a wide variety of useful tools, we list and dive into a few of them here:
View transactions on the blockchain
Example of a random transaction on Etherscan. Here you see the transaction hash, which is the unique identifier of your specific action on the blockchain. Next to that in which block the transaction was included, when it was confirmed (transacted), the from and to addresses, in this example the recipient used ENS. We know this because of the .eth address and no long traditional 0x address format (e.g. the Rollbit hotwallet address in below screenshot). The value of the transfer and how much transaction fee (gas fee) was paid are also visible.
Look up token contract addresses and verify them
Example of WETH on Polygon. If you want to verify a smart contract (Token/NFT) on the blockchain, you can visit the block explorer. Here you see the contract address (the big red circle in the image below), verifying this one alone is already important. You might deal with a scam contract if this address doesn’t match on the website you interact with.
Next to that, there is a tab called ‘contract’. In here you can see the actual code, read the contract, or write to the contract (meaning interacting with it, for example to transfer or to mint a NFT directly from the contract).
Check NFT stats
If you have a desire to trade NFTs. You can use the blockchain explorer to analyze NFT collections, to see how they are performing and much more. You can even download the data from here. An example of the NFT section on Etherscan:
Revoke smart contracts
An important feature to use is revoke smart contracts. This is a feature to cancel out all approvals you have done in the past. To ensure proper security, it is recommended to revoke access to everything you approved with unlimited allowance. Example token approval removal tools for both Ethereum and Polygon are linked below, but there are many more:
You are able to connect your WEB3 wallet with the above tools. Once connected it shows which contracts still have allowance to interact with your wallet. To revoke them you must initiate a new transaction with 0 allowance. A gas fee will have to be paid to do so. On Ethereum, on layer 1, this can be costly (few dollars per tx) if you interacted with many contracts in the past. For Polygon, being it layer 2, the gas fee will be about 1 cent.
And more
Next to the above, you can do much more. For example on the Polkadot explorer you have access to governance, staking, parachain information, and access to various tools. Cardano also allows for information about staking and protocol parameters. Most of the explorers offer tools to analyze gas fees and see current expected prices. There are resources available such as graphic tools for market data, blockchain data, and more.
Consensus
You will find that various blockchains work with different consensus mechanisms. These mechanisms are fault-tolerant and are used to reach agreements on a single state on the blockchain network.
Layers
There are various Blockchain Protocol layers with their own benefits and limitations. In this section we will dive into which layers exist, how they work, why they are important to understand, where you’ll find them, and much more.
Smart Contracts
Now that we’ve ventured into the realms of blockchain with consensus mechanisms and blockchain layers, it’s time to shine a light on the genius feature that elevates this technology to new heights: Smart Contracts.
Consensus Mechanisms:
Blockchains operate on consensus, a fascinating way to ensure agreement across a network. It’s like a digital democracy where nodes work together to validate transactions, providing a fault-tolerant and secure environment.
Protocol Layers:
Just like a delicious layer cake, Blockchains have layers too! Each layer has its unique benefits and limitations, contributing to the overall functionality. We’ll explore these layers and unravel why they’re crucial in shaping the Blockchain landscape.
Smart Contract:
Smart contracts are automated, self-executing agreements on blockchains. They enforce predefined conditions, eliminating intermediaries for transparent and efficient transactions across various industries.
Quiz
Curious to see how much you’ve absorbed? Take a quick quiz at the end of this section to gauge your understanding. No pressure, it’s all part of the learning journey!
So, buckle up! We’re about to embark on a journey through the intricate web of Blockchains, demystifying complexities, and uncovering the endless possibilities that lie within.
