With the advent and worldwide spread of the cryptocurrency and electronic transactions between users, the widely used term appeared – the Blockchain. So what the Blockchain actually is? Is it has features and advantages for practical usage? Let’s see its main opportunities for digital transactions and other spheres.
The Blockchain is a sequence of blocks that follow one another, keeping a certain algorithm within its own secure system. With this technology, users can store personal data and information about transactions, contracts and any other digital deals.
What are the practical uses of the Blockchain? Comprehensively considering all the characteristics of this technology, we can distinguish several basic useful functions:
- The advantages of storing information in the form of separate, completely independent records;
- Possibilities for storing important information of any type. The Blockchain provides an opportunity to completely anonymous storage of credit history, facts of violations of all kinds, and even registration of marriages. Any economic, legal or administrative action can be maintained with the help of a block structure;
- The digital information isn’t storing in any specific place – they are distributed evenly between numerous computers within the Internet;
- The ability to quickly and free access to the information of interest from anywhere in the world with access to the Internet. This guarantees a transparent and open policy of using the Blockchain for data storage.
The Blockchain uses a single common system for storing all types of information. All stored data is built on the same principle – the formation of a chain of blocks according to a certain algorithm.
For the first time, the term “Blockchain” was used to define and clarify the mechanism of the Bitcoin network. Nowadays, it is mainly used to structure the data of the cryptocurrency market.
The main principles of the Blockchain system
It is important not only to know how the Blockchain works but also about how the electronic billing system works with it and how these processes are displayed in the general block system.
All digital records form separate blocks of information, interconnected in a certain way, without disrupting the overall structure of the network of the block system. These chains always retain a strict sequence, since they are distributed according to specific embedded algorithms.
Each new block, according to a consistent structure, is associated with the previous one. Due to a large amount of data, each individual transaction or data set forms a long sequence of blocks of information.
All chains are encrypted – this is called “hashing”. In order to hash a large amount of data, a large number of servers or computers on the same network are used simultaneously. If, as a result of encryption, it is impossible to obtain the same results for different blocks, the new block gets a new, unique code. It is called an electronic signature. After the chain of blocks is fully formed and all units have their own, unique electronic signatures, they can not be changed anymore – as well as faked too. In a complete chain of blocks, you can only add new blocks of digital information.
Updating the information included in the same chain of blocks occurs simultaneously on all computers that support the work of the Blockchain.
In general, Blockchain technology is a three-dimensional lattice, each cell of which is a block with user data. In the event that several blocks are made up of identical information, the branch circuit begins. Also, there is an instantaneous data exchange within the same circuit. Everything happens locally, within the same chain of blocks, considering all their branches.
Confirmation of the operation that is part of the network of blocking does not affect other parallel operations with information occurring on the same network. A transaction that has received multiple confirmations will be included in the process and cannot be canceled.
Proceeding from this information, it can be summarized that Blockchain technology is oriented to work with the cryptocurrency market.
The main advantages of Blockchain technology
First, the use of blocking technology minimizes the risk of hacking personal information of users and the system itself. In order for the attack to be successful, attackers will have to simultaneously access all the computers and databases that make up the general Blockchain network.
In addition, the technology guarantees the absolute anonymity of all operations and the complete safety of personal data of all users. If a change occurs in the data block during the work or during the transaction, an entirely new digital signature is assigned to it. Any discrepancy between digital signatures of blocks of information is fixed within the system.
Blockchain technology usage within various spheres
The well-known analytical company SB Insights presented a list of economic and other areas where Blockchain technologies can be successfully used:
- Banks. Opportunities for carrying out very fast and anonymous transactions are very interesting for representatives of banking. The introduction of Blockchain technologies can save up to $ 20 billion a year on staff, which usually deals with ensuring the confidentiality and security of financial transactions.
- User transactions and payments on the Internet. The absence of a direct commission for the use of the Blockchain network, anonymity, and decentralized structure allows for rapid anonymous transfers of funds between users around the world.
- The normative side of payments and actions within the Blockchain network is very convenient since there is a documentary evidence on the transfer of funds or the conduct of an action involving network algorithms.
- Smart contracts. Most transactions are confirmed and carried out through a Blockchain network without human intervention.
- The Cybersecurity sector. Given all the security factors and a fairly complex system of algorithms for confirming the same payments, the Blockchain system provides the highest level of security for user data.
- Voting system. Complete anonymity and high level of data security guarantee fair and transparent results of elections conducted with the use of the Blockchain.
- Automobile market. The ability to use smart contracts to buy or sell cars greatly facilitates the payment process and automates the market.