Blockchain explained technology
Dwain Ross
03 / June / 21
Visitors: 226
In the state of the modern world, the blockchain technology is seen as a complex mechanism with high reliability. It is often compared with an accounting book, which retains all the data about the transactions. The main characteristic of the mechanism is decentralization but there is a lot more to say about it if you want to have blockchain explained thoroughly.
The large-scale mechanism of the blockchain technology
Blockchain is a digitally signed register of transactions, contracts, deals. The algorithm allows you to record data on marriages, violation of traffic rules on the road, property rights or issued loans. Theoretically, any data that need to be checked and updated can use the blockchain technology including medicine, logistics and legal practice. The main advantage is that there is no single storage space for the registry. It is partially stored on several thousand computers scattered around the world. Each user can see the latest updated version of the registry so that the rights of the participants in the process are equal.
The work process of blockchain can be explained like this:
- Records that have a digital structure are grouped into blocks.
- They are binded by means of two components: cryptographic encryption and chronological data. Each information set of blockchain technology has a link to the predecessor set.
- The addition of newly created elements always occurs exclusively at the end of the chain.
Hashing (the process of data encryption) is done by a huge number of different computers working in a single Internet space. If the result of the calculations is an identical sequence of symbols - then the block receives the only existing digital signature. This is the essence of technology. When the registry is updated and a new block is added to the existing chain, its further changes will become impossible. Only new entries can be attached to the new generated block so the probability of forgery is excluded. The key factor is the registry update, which occurs simultaneously on all computers.
To understand the general meaning of the system, we can compare the technology with conventional processes. Imagine a graph that has several thousand copies. Then imagine that the network development is done in such a way that all copies of the graphs are updated at the same time and everyone possesses the information in equal measure.
Prospects for using the technology
It is necessary to distinguish between the concepts "bitcoin" and "blockchain ". Yes, BTC is built on this technology, but blockchain can exist outside of the cryptocurrency. Already today, the leading banks of the world have joined the R3 consortium in order to study the principles of the blockchain. Financial and credit institutions are aware that the use of the technology will allow them to significantly reduce some expenses or even cut them from their plan.
Blockchain systems can be divided into three groups:
- Digital currencies.
- A group designed to work with non-standard contracts that do not have centralized management of organizations and assets that can be programmed.
- A group focused on the application of the blockchain technology for purposes that do not affect the economy. For example, the algorithm can be used to support the work of e-government in the foreseeable future.
Opponents of the technology argue that cryptocurrencies and blockchain can be used with incorrect intentions. In particular, such people view new technologies as a tool for terrorists. For example, an anonymous electronic trading platform was established under the name Silk Road, where people were selling weapons, drugs, illegally obtained personal data and even human organs. These goods were paid by bitcoins. Therefore, the say we need to maintain regulation since anonymity of the instrument can be a threat to society. In order to lessen that fear, you need to teach people about the technology properly.
