What’s Blockchain and what’s it for?
The Bitcoin cryptocurrency is now known to everyone. It is also known that Bitcoin operates on the basis of Blockchain technology. But the essence of this technology is still not clear to the general public. And without understanding the principle of blockchain’s work, and its importance for the development of public relations, it is difficult to understand the essence of cryptocurrencies and the prospects for new electronic payment systems. The advent of blockchain is compared in importance with the advent of the Internet. The possibilities for its application are endless, and dozens of ways of using this technology are already known. (Read more about Bitcoin in the article “What happens to Bitcoin in 2018?)
BLOCKCHAIN, WHAT IS IT?
The concept of “blockchains” has been known for a long time among computer technology specialists. Blockchain’s principle of operation is straightforward, unless technical nuances such as encryption or access rights are taken into account. Blocks are open databases of a certain volume. Blocks are linked by general information and rules for obtaining this information. The blockchain forms a distributed database containing a constantly growing number of records. Any vital information can be stored in this database. Blockchain allows you to capture any events or information in your chain forever
The information is stored simultaneously on multiple servers and is constantly updated. At the same time, each block refers to a different block previously created in the chain. Blockchain can be represented by an account book available to each participant in a particular event. Blocks can be filled with any events. The most famous nowadays are financial transactions with various cryptocurrencies. In the process of transferring digital money, all transactions of all participants are recorded in the blockchain.
Similarly, identification data, voting results, ownership rights, commercial contracts, etc., can be entered into blocks. Such public registers are characterized by a high degree of security, the impossibility of falsification and a guarantee of security. When trying to change something, the system calls tens of thousands of copies and restores the correctness of the recording.
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BLOCKCHAIN TECHNOLOGY FUNCTIONING
Data block chains are created and stored on the computer network. The basic blockchain system is a sequence of blocks that is constantly increasing. The blocks are distributed among the participants via a peer-to-peer decentralized network, which consists of computational “nodes”. Each node (node) is a computer on which a special program (client) is installed. There are two categories of participants in the network. There are regular users who send money or make records, and miners who create blocks of these records. Miners check transactions and send blocks to users.
Each block contains a unique time stamp (hash sum). Blocks are assembled in chains according to a strictly defined order. When attempting to change the sequence in the circuit, the system will not accept new blocks because of the structure mismatch. Two main methods are used to protect against time stamp changes. The “Proof of Work” method is more common and used in bitcoin mining. That literally means “proof of work.” Another method is “proof of ownership” or “Proof of Stake”, which is just beginning to be implemented and should completely replace the first method in the long run.
Blockchain eliminates the risks of storing data on the network, which are possible in centralized storage systems. Blockchains do not have vulnerability points like user names and passwords that are attacked by computer hackers. Blockchain uses encryption technology for security, which uses two types of keys – private and public. On the example of a bitcoin, a public key is the address to which coins are sent. A private key provides control over the bitcoins. Of course, you have to keep your secret key safe.
Now blockchain is mainly known as the basis for the functioning of cryptocurrencies. Several of the most popular currencies have established themselves in the Forex market, which makes them known to millions of traders. Many Forex brokers offer to trade currency pairs with Bitcoin, Etherium and other coins. In total, more than 700 cryptocurrencies have exchange value, although most of them are the internal currencies of blockchain-based projects. (Read more about cryptocurrency trading in the article “Cryptocurrency as a Forex trading tool”)
Such a number of new projects testifies to the rapid spread of blockchain to all aspects of human activity. This is particularly true for international remittances. Blockchain technology has a huge potential for simplifying and improving the efficiency of financial services. Leading European and American banks are opening blockchain projects. The Visa World Payment System intends to apply new technologies to reduce the cost and speed of payments and protect against fraud.
THE PROSPECTS FOR BLOCKCHAIN TECHNOLOGY
An important aspect of using blockchain is the emergence of smart contracts that already run on the Efirium platform. Smart contracts make it possible to exclude legal red tape in the sphere of notaries, by more perfect ways to protect copyrights, personal data and property rights. There is already an electronic notary “Stampery”, which certifies transactions through blockchain and service “Ascribe”, confirming the copyright. Start-ups are emerging to create digital identity identifiers that cannot be tampered with. This may in the long run completely replace passports and other identity cards.
The revolutionary nature of blockchain is comparable to the creation of the Internet, but there are still a lot of problems on both the technical and psychological levels. Changes will require the rebuilding of large systems that will resist, trying to preserve their structure and properties. In addition, there is no legal framework and no uniform standards yet. And public trust is based on laws and standards.
In conclusion, watch an interesting video about the prospects of blockchain technology.