How Data Is Processed and Stored in the Blockchain

As blockchain technology is taking over the web, users are still finding it challenging to understand the difference between conventional web technologies and web3 technologies.

In this article, we’ll break down where the blockchain is and where is the blockchain stored and how data is processed in it.

Fundamentals of Blockchain Technology

Blockchain, simply put, is a database that’s shared and synchronized across several computers in a network. In a blockchain, transactions are securely stored in a peer-to-peer network of computers, also known as nodes. It utilizes a hash, which is an unchangeable cryptographic signature. Hashing transforms every type of data into a unique set of characters, improving the blockchain’s integrity. The key features of blockchain technology are transparency, security, and immutability. This means that once a transaction is recorded, it can’t be changed or deleted.

To clearly understand where is the blockchain stored, we must first have a clear picture of how the traditional web stores and processes information.

How Data Is Stored Traditionally

In the traditional web, computers store data in centralized databases with tables, rows, and columns that can be read, written, updated, or deleted by the database administrator.

Centralized databases are easier to manage and are very scalable; however, lack transparency, security, and integrity. This is very unlike blockchain networks, which are transparent and immutable.

How Transactions Happen in the Blockchain

For a transaction to take place in the blockchain, three components of the blockchain have to be present: nodes, blocks, and miners.

1. Nodes

A node can be any computer that is connected to a blockchain network to validate and relay transactions. All nodes on a blockchain are linked together, and they frequently exchange the most recent data with one another, ensuring that all nodes are up to date.

The three primary roles of nodes are:
Verifying transactions on the blockchain, and accepting or denying them based on authenticity.
Storing block transactions on the blockchain.
Sharing transaction information with other nodes on the blockchain.

2. Blocks

In a blockchain, a block is a single, unique unit of transactional records. Blocks can be differentiated based on their role in the network.

• Genesis block: The founding block in a network. In other words, the first block in the blockchain. This block makes the network immutable by allowing the creation and linking of subsequent blocks.

• Valid blocks: Blocks that have been mined and are now part of the blockchain. Valid blocks contain transactions that have been validated/verified by miners.

• Orphan blocks: Blocks that are no longer part of a blockchain network. Orphan blocks are rejected blocks that are created when numerous blocks are mined at the same time but are not added to the blockchain.

• Miners

The process of adding new transactions on the blockchain is called mining. Miners validate/verify transactions, which are then added to a blockchain.

How a Transaction Happens

A blockchain transaction life-cycle has three stages: authentication, authorization, and proof-of-work (PoW).

1. Authentication

Before any transaction takes place, a user has to successfully authenticate themselves using their wallet’s private keys. The most popular authenticating method is using a seed phrase.

A seed phrase is a randomly selected set of words that represent a long string of random numbers and letters (your private key).

A private key looks like this:

0C28FCA386C7A227600B2FE50B7CAE11EC86D3BF1FBE471BE89827E19D72AA1D

This is a bit hard to memorize, so instead, we use a seed phrase as such:

spare govern hawk eternal decline session load grace peasant west bargain always meadow ensure quality hill neglect hand toss lyrics stereo call snap about

Usually, accessing your wallet with a seed phrase is easier than using your private key because it’s easier to remember. Seed phrase authentication…