How to build a blockchain infrastructure

How to build a blockchain infrastructure

Satoshi Nakamoto's white paper on Bitcoin, published in 2008, has revolutionised the world of finance and technology. The white paper not only introduces the concept of Bitcoin but also details how this new technology can be built using blockchain.

Since then, blockchain has become an increasingly popular technology with numerous applications beyond cryptocurrencies, including supply chain management, voting systems, and more. In this article, we will explore the process of building a blockchain infrastructure based on Satoshi Nakamoto's white paper.

Understanding the basics of blockchain infrastructure

The first step in building a blockchain is to understand the basics of how it works. At a high level, a blockchain is a distributed ledger that allows for secure, transparent, and tamper-proof transactions between two or more parties without the need for a centralised intermediary.

Each transaction is verified by a network of nodes that validate the transaction's authenticity, and then add it to a block. Once a block is added, it cannot be altered or deleted, ensuring the security of the transaction.

To create a blockchain, we first need to define the rules that will govern it. These rules will dictate how transactions are validated, how new blocks are added, and how consensus is reached on the state of the blockchain. The most critical aspect of these rules is the consensus algorithm. The consensus algorithm is the method used to reach an agreement between all the nodes in the network on the current state of the blockchain.

The proof-of-work consensus algorithm

Satoshi Nakamoto's white paper proposed the proof-of-work (PoW) consensus algorithm. In PoW, nodes on the network compete to solve a complex mathematical puzzle to validate a block. The first node to solve the puzzle is rewarded with new coins, and the block is added to the blockchain. This process is called mining.

To implement the PoW consensus algorithm, Nakamoto proposed a protocol that defines how nodes on the network can participate in the mining process. Nodes must be able to validate transactions, create new blocks, and compete to solve the mathematical puzzle. This protocol should also define the reward system for mining, including the number of new coins issued per block and any transaction fees collected.

The blockchain infrastructure

Once the protocol is defined, we need to create the blockchain network itself. The network can be built on top of existing infrastructure or created from scratch. The network will consist of nodes that can communicate with each other, validate transactions, and mine new blocks. Nodes can be run by individuals or organisations, and the more nodes there are on the network, the more secure it becomes.

One of the critical aspects of building a blockchain is ensuring that the network is secure from attack. There are several ways to do this, including implementing strong encryption and using a distributed network architecture. In addition, it is crucial to have a plan in place for dealing with potential attacks, including denial of service (DoS) attacks, 51% attacks, and other types of attacks.

The original Bitcoin

Bitcoin has had many competing development groups over the years that led to the creation of implementations that diverged from Satoshi’s original ideas. Bitcoin SV however has distilled the Bitcoin protocol back to its purest form, and locked its protocol in stone, keeping the key economic systems and functionality described in the Bitcoin white paper whilst combining it with state-of-the-art technology, allowing thousands of enterprises and developers to safely build upon it.

The BSV Academy’s free Introduction to Bitcoin Theory course covers the design of Bitcoin as a system as prescribed by Satoshi Nakamoto. This course is open to anyone who is interested in Bitcoin and is the beginner course in this series. Some technical experience would be helpful to complete the course, however, it is open to anyone regardless of experience.

The course goes through the Bitcoin white paper section by section, elaborating on the concepts contained within each. This section focuses on the concept of Proof-of-Work and why it is integral to the BSV blockchain.

To make it as effortless as possible for you to have access to this educational material, we are publishing the entire course here on our blog. Stay tuned for a section-by-section release, and remember that you are still welcome to enrol in the BSV Academy to gain a certificate of completion to add to your resume.

Ryan Brothwell
Ryan Brothwell

Deputy Editor, Bitcoin Association