Just recently, October 31, 2018, Bitcoin celebrated its first anniversary – the first cryptocurrency is 10 years old. Now almost all modern people have heard of Bitcoin. But only a few of them can respond in a clear and concise way to the question: what are the cryptocurrencies and, moreover, what is blockchain? In this article we will try to describe it in simple words, so it's blockchain and how it works.
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- The history of creation and a brief description of Blockchain
- Technical brief
- Private and public blockchain
- Advantages and disadvantages of blockchain technology
Blockchain technology it is the basis of cryptocurrency, and for some time it has been applied in other areas of life. From its name it becomes clear that, in reality, it is a chain of interconnected blocks.
The most important feature of Blockchain technology is decentralization. This means that the operability of the network is not provided by a single center, but by all its participants at the same time. For ease of understanding, the blockchain operation principle can be compared with Torrent, where the user and server are the same. The files downloaded by the tracker are not located on the central server: they are stored by other users. The operations in the blockchain occur exclusively between users, without intermediaries.
The term "blockchain" was used for the first time on October 31st, 2008. On the same day, the mysterious creator of Bitcoin Satoshi Nakamoto has published its legendary article "Bitcoin: a one-off electronic monetary system". The Bitcoin network was launched at the beginning of January 2009. But the concept of the modern blockchain was announced in the years & # 39; 90. Satoshi Nakamoto has devoted much effort to the systematization of cryptographic works, which has been published in the last 20-25 years.
We will not deepen the cryptography, we will use strictly defined terms and we will draw complex graphs. Firstly, 99.99% of people simply will not understand this (including us), and secondly, to fully open this topic, not an article, but an entire book is needed. In this article we are talking only about the basics of blockchain systems architecture.
Thus, the blockchain ledger can be conditionally compared to a book. Contains blocks that can be called "pages" of this book. Each block has a name that contains information about the previous block and the key from the next block. This is called a "chain of blocks". All information is contained in an encrypted HASH. Block keys are found by miners who maintain network performance.
All of us are used to associating the blockchain only to finance and more specifically to cryptocurrencies. But it is worth noting that this technology is much more versatile, it can be applied in other areas of life, such as:
- proof of intellectual property rights;
Bitcoin or any other cryptocurrency network uses a public blockchain, the keys of which are publicly available. It is perfect for the concept of cryptocurrency, but it can not be used to maintain the workflow of private companies. The private blockchain is perfect for this. Lately it causes more interest in many companies. For example, it can be used for tracking commercial goods and shipping companies. This solution will significantly reduce costs and eradicate all types of fraud.
First of all, let's talk about the advantages:
- Decentralization. This network is almost impossible to close, because for this it is necessary to disconnect all its members from the network.
- Safety and reliability. The technical characteristics of the technology exclude falsification, data fraud and hacker attacks.
- Versatility. This technology is expected for a great future, because it can be used in various sectors.
Unfortunately, blockchain technology is not perfect and has several disadvantages:
- Resizing problems.
- Irreversibility of operations. After the operation has been registered in blockchain, it is impossible to delete it, even if it was made by mistake.
Blockchain technology can change our lives in a cardinal way. Only the narrow specialists are able to understand all the mechanisms of his work. The basic principles, which we have discussed in this article, will be sufficient for the vast majority of people.
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