Blockchain Basics

This guide introduces fundamental blockchain concepts for newcomers. If you’re already familiar with blockchain technology, skip to XDC Architecture.

What is Blockchain?

A blockchain is a distributed digital ledger that records transactions across many computers. Think of it as a shared spreadsheet that:

• Everyone can read
• No single person controls
• Cannot be altered once written
• Automatically stays synchronized

flowchart LR
    A[Transaction] --> B[Verification]
    B --> C[Block Created]
    C --> D[Added to Chain]
    D --> E[Distributed to Network]

Key Concepts

1. Decentralization

Instead of one central server (like a bank), blockchain uses many computers (nodes) worldwide:

Centralized	Decentralized
Single point of failure	No single point of failure
Trust the institution	Trust the protocol
Can be censored	Censorship resistant
Institution controls data	Users control data

2. Blocks

Transactions are grouped into blocks. Each block contains:

• Transactions: The actual data being recorded
• Timestamp: When the block was created
• Previous Block Hash: Links to the prior block
• Block Hash: Unique identifier for this block

┌─────────────────────────────────┐
│           Block #100            │
├─────────────────────────────────┤
│ Previous Hash: 0x7a8b...        │
│ Timestamp: 2024-01-27 10:00:00  │
│ Transactions:                   │
│   - Alice → Bob: 10 XDC         │
│   - Carol → Dave: 5 XDC         │
│ Block Hash: 0x9f3c...           │
└─────────────────────────────────┘
           ↓
┌─────────────────────────────────┐
│           Block #101            │
├─────────────────────────────────┤
│ Previous Hash: 0x9f3c...        │
│ ...                             │
└─────────────────────────────────┘

3. Cryptographic Hashing

A hash is a unique fingerprint of data. Even a tiny change creates a completely different hash:

"Hello World" → 0x7f83b...
"Hello World!" → 0x5d41a...  (completely different!)

This makes tampering detectable—changing any transaction would change all subsequent hashes.

4. Consensus

How do all nodes agree on the “true” state of the blockchain? Through consensus mechanisms:

Mechanism	How It Works	Example
Proof of Work (PoW)	Solve complex puzzles	Bitcoin
Proof of Stake (PoS)	Stake tokens as collateral	Ethereum
Delegated PoS (DPoS)	Elected validators	XDC Network

XDC uses XDPoS (XinFin Delegated Proof of Stake) - more on this in XDPoS Explained.

5. Smart Contracts

Smart contracts are programs that run on the blockchain. They:

• Execute automatically when conditions are met
• Cannot be changed once deployed
• Are transparent and verifiable

Example: An escrow smart contract that automatically releases payment when goods are delivered.

// Simple smart contract example
contract Escrow {
    address buyer;
    address seller;

    function releaseFunds() public {
        require(goodsDelivered == true);
        seller.transfer(amount);
    }
}

6. Wallets & Addresses

A wallet stores your private keys. An address is your public identifier (like an email address for crypto):

• Private Key: Secret! Never share. Used to sign transactions.
• Public Key: Derived from private key.
• Address: Derived from public key. Safe to share.

Private Key → Public Key → Address
(secret)      (derived)    (share this)

XDC Address Example: xdc71C7656EC7ab88b098defB751B7401B5f6d8976F

Types of Blockchains

Public Blockchains

• Anyone can participate
• Fully transparent
• Examples: Bitcoin, Ethereum, XDC Mainnet

Private Blockchains

• Permissioned access
• Controlled by organization
• Examples: XDC Private Subnets

Consortium Blockchains

• Multiple organizations share control
• Semi-private
• Example: Trade finance networks on XDC

Why XDC Network?

XDC Network combines the best of both worlds:

Feature	Benefit
Hybrid Architecture	Public transparency + private options
Enterprise Focus	Built for trade finance and business
EVM Compatible	Use existing Ethereum tools
Fast & Cheap	2s blocks, < $0.0001 fees
Energy Efficient	PoS uses 99.9% less energy than PoW

Getting Started

Ready to explore XDC Network?

1. Get a Wallet: Set up XDCPay
2. Get Test XDC: Faucet
3. Explore: Block Explorer
4. Build: Developer Quick Start

Next Steps

• XDC Architecture - Deep dive into XDC’s design
• XDPoS Consensus - How XDC achieves consensus
• Gas & Fees - Understanding transaction costs

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