Tag Archives: Bitcoin

How to Build Your Own Blockchain Part 4.1 — Bitcoin Proof of Work Difficulty Explained

If you’re wondering why this is part 4.1 instead of part 4, and why I’m not talking about continuing to build the local jbc, it’s because explaining Bitcoin’s Proof of Work difficulty at a somewhat lower level takes a lot of space. So unlike what this title says, this post in part 4 is not how to build a blockchain. It’s about how an existing blockchain is built.

My main goal of the part 4 post was to have one section on the Bitcoin PoW, the next on Ethereum’s PoW, and finally talk about how jbc is going to run and validate proof or work. After writing all of part 1 to explain how Bitcoin’s PoW difficulty, it wasn’t going to fit in a single section. People, me included, tend get bored in the middle reading a long post and don’t finish.

So part 4.1 will be going through Bitcoin’s PoW difficulty calculations. Part 4.2 will be going through Ethereum’s PoW calculations. And then part 4.3 will be me deciding how I want the jbc PoW to be as well as doing time calculations to see how long the mining will take.

The sections of this post are:

  1. Calculate Target from Bits
  2. Determining if a Hash is less than the Target
  3. Calculating Difficulty
  4. How and when block difficulty is updated
  5. Full code
  6. Final Questions

TL;DR

The overall term of difficulty refers to how much work has to be done for a node to find a hash that is smaller than the target. There is one value stored in a block that talks about difficulty — bits. In order to calculate the target value that the hash, when converted to a hex value has to be less than, we use the bits field and run it through an equation that returns the target. We then use the target to calculate difficulty, where difficulty is only a number for a human to understand how difficult the proof of work is for that block.

If you read on, I go through how the blockchain determines what target number the mined block’s hash needs to be less than to be valid, and how that target is calculated.

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Calculate Target from Bits

In order to go through Bitcoin’s PoW, I need to use the values on actual blocks and explain the calculations, so a reader can verify all this code themselves. To start, I’m going to grab a random block number to work with and go through the calculations using that.

>>>import random
>>> random.randint(0, 493928)
111388

Block number 11138 it is! Back in time to March of 2011 we go.

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How to Build Your Own Blockchain Part 2 — Syncing Chains From Different Nodes

Welcome to part 2 of the JackBlockChain, where I write some code to introduce the ability for different nodes to communicate.

Initially my goal was to write about nodes syncing up and talking with each other, along with mining and broadcasting their winning blocks to other nodes.   In the end, I realized that the amount of code and explanation to accomplish all of that was way too big for one post. Because of this, I decided to make part 2 only about nodes beginning the process of talking for the future.

By reading this you’ll get a sense of what I did and how I did it. But you won’t be seeing all the code. There’s so much code involved that if you’re looking for my total implementation you should look at the entire code on the part-2 branch on Github.

Like all programming, I didn’t write the following code in order. I had different ideas, tried different tactics, deleted some code, wrote some more, deleted that code, and then ended up with the following.

This is totally fine! I wanted to mention my process so people reading this don’t always think that someone who writes about programming does it in the sequence they write about it. If it were easy to do, I’d really like to write about different things I tried, bugs I had that weren’t simple to fix, parts where I was stuck and didn’t easily know how to move forward.

It’s difficult to explain the full process and I assume most people reading this aren’t looking to know how people program, they want to see the code and implementation. Just keep in mind that programming is very rarely in a sequence.

Twitter, contact, and feel free to use comments below to yell at me, tell me what I did wrong, or tell me how helpful this was. Big fan of feedback.

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TL;DR

If you’re looking to learn about how blockchain mining works, you’re not going to learn it here. For now, read part 1 where I talk about it initially, and wait for more parts of this project where I go into more advanced mining.

At the end, I’ll show the way to create nodes which, when running, will ask other nodes what blockchain they’re using, and be able to store it locally to be used when they start mining. That’s it. Why is this post so long? Because there is so much involved in building up the code to make it easier to work with for this application and for the future.

That being said, the syncing here isn’t super advanced. I go over improving the classes involved in the chain, testing the new features, creating other nodes simply, and finally a way for nodes to sync when they start running.

For these sections, I talk about the code and then paste the code, so get ready.

Expanding Block and adding Chain class

This project is a great example of the benefits of Object Oriented Programming. In this section, I’m going to start talking about the changes to the Block class, and then go in to the creation of the Chain class.

The big keys for Blocks are:

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How to Build Your Own Blockchain Part 1 — Creating, Storing, Syncing, Displaying, Mining, and Proving Work

I can actually look up how long I have by logging into my Coinbase account, looking at the history of the Bitcoin wallet, and seeing this transaction I got back in 2012 after signing up for Coinbase. Bitcoin was trading at about $6.50 per. If I still had that 0.1 BTC, that’d be worth over $500 at the time of this writing. In case people are wondering, I ended up selling that when a Bitcoin was worth $2000. So I only made $200 out of it rather than the $550 now. Should have held on.

Thank you Brian.

Despite knowing about Bitcoin’s existence, I never got much involved. I saw the rises and falls of the $/BTC ratio. I’ve seen people talk about how much of the future it is, and seen a few articles about how pointless BTC is. I never had an opinion on that, only somewhat followed along.

Similarly, I have barely followed blockchains themselves. Recently, my dad has brought up multiple times how the CNBC and Bloomberg stations he watches in the mornings bring up blockchains often, and he doesn’t know what it means at all.

And then suddenly, I figured I should try to learn about the blockchain more than the top level information I had. I started by doing a lot of “research”, which means I would search all around the internet trying to find other articles explaining the blockchain. Some were good, some were bad, some were dense, some were super upper level.

Reading only goes so far, and if there’s one thing I know, it’s that reading to learn doesn’t get you even close to the knowledge you get from programming to learn. So I figured I should go through and try to write my own basic local blockchain.

A big thing to mention here is that there are differences in a basic blockchain like I’m describing here and a ‘professional’ blockchain. This chain will not create a crypto currency. Blockchains do not require producing coins that can be traded and exchanged for physical money. Blockchains are used to store and verify information. Coins help incentive nodes to participate in validation but don’t need to exist.

The reason I’m writing this post is 1) so people reading this can learn more about blockchains themselves, and 2) so I can try to learn more by explaining the code and not just writing it.

In this post, I’ll show the way I want to store the blockchain data and generate an initial block, how a node can sync up with the local blockchain data, how to display the blockchain (which will be used in the future to sync with other nodes), and then how to go through and mine and create valid new blocks. For this first post, there are no other nodes. There are no wallets, no peers, no important data. Information on those will come later.

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TL;DR

If you don’t want to get into specifics and read the code, or if you came across this post while searching for an article that describes blockchains understandably, I’ll attempt to write a summary about how a blockchains work.

At a super high level, a blockchain is a database where everyone participating in the blockchain is able to store, view, confirm, and never delete the data.

On a somewhat lower level, the data in these blocks can be anything as long as that specific blockchain allows it. For example, the data in the Bitcoin blockchain is only transactions of Bitcoins between accounts. The Ethereum blockchain allows similar transactions of Ether’s, but also transactions that are used to run code.

Slightly more downward, before a block is created and linked into the blockchain, it is validated by a majority of people working on the blockchain, referred to as nodes. The true blockchain is the chain containing the greatest number of blocks that is correctly verified by the majority of the nodes. That means if a node attempts to change the data in a previous block, the newer blocks will not be valid and nodes will not trust the data from the incorrect block.

Don’t worry if this is all confusing. It took me a while to figure that out myself and a much longer time to be able to write this in a way that my sister (who has no background in anything blockchain) understands.

If you want to look at the code, check out the part 1 branch on Github. Anyone with questions, comments, corrections, or praise (if you feel like being super nice!), get in contact, or let me know on twitter.

Step 1 — Classes and Files

Step 1 for me is to write a class that handles the blocks when a node is running. I’ll call this class Block. Frankly, there isn’t much to do with this class. In the __init__ function, we’re going to trust that all the required information is provided in a dictionary. If I were writing a production blockchain, this wouldn’t be smart, but it’s fine for the example where I’m the only one writing all the code. I also want to write a method that spits out the important block information into a dict, and then have a nicer way to show block information if I print a block to the terminal.

class Block(object):
  def __init__(self, dictionary):
  '''
    We're looking for index, timestamp, data, prev_hash, nonce
  '''
  for k, v in dictionary.items():
    setattr(self, k, v)
  if not hasattr(self, 'hash'): #in creating the first block, needs to be removed in future
    self.hash = self.create_self_hash()

  def __dict__(self):
    info = {}
    info['index'] = str(self.index)
    info['timestamp'] = str(self.timestamp)
    info['prev_hash'] = str(self.prev_hash)
    info['hash'] = str(self.hash)
    info['data'] = str(self.data)
    return info

  def __str__(self):
    return "Block<prev_hash: %s,hash: %s>" % (self.prev_hash, self.hash)

When we’re looking to create a first block, we can run the simple code.

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