Blockchain is one of the most popular technologies in recent years that you may not be familiar with yet. Blockchain is now confused with bitcoin, if bitcoin is the only cryptocurrency that uses blockchain. In this article, we decided to say in simple language what blockchain is and what it does. If you are eager in this topic, please read this article to the end.
What is Blockchain?
It is not a company or a specific program, but an open source technology that manages a set of data on the Internet in a completely new way, without a single person or company having control over it. Blockchain is a great invention of the present century, which will change the future of technology.
This emerging technology can be for developing applications such as social networks, messengers, games, currency exchanges, voting systems, online stores and more. In a sense, it’s similar to the Internet, which is why some have dubbed it Internet 3.
History of Blockchain
Safe encrypted blockchain was first described in 1991 by Stuart Haber and W. Scott Stornetta, but it was Satoshi Nakamoto who released the first bitcoin cryptocurrency in 2009. Bitcoin practically established the first blockchain database.
There is no information about Satoshi Nakamoto other than this name. For this reason, some consider Nakamoto a pseudonym used by a group, while others believe that he is no more than one person. However, Nakamoto’s identity is unknown to the public.
How does Blockchain work?
Blockchain is a decentralized system, and data is not stored in a single location, but a copy of the data is sent to everyone involved in the blockchain. This means that all the data that is stored is available to the public and can be easily checked and therefore can not be hacked because there are multiple versions of information with different people. In Blockchain, third party approval is not required to confirm transactions. But how are transactions approved? Before answering this question, it is important to familiarize yourself with three important concepts in blockchain:
A blockchain is a series of interconnected blocks, each block containing three basic elements:
- Data in the block (which is different for each type of blockchain. For example, bitcoin data stores details about transactions, including the sender, recipient, and amount of coins exchanged.)
- A hash is a completely unique 64-character string of numbers and letters. When a new block is created, its hash is calculated and placed in the block, and with any change in the block, the hash also changes.
- The previous hash block is also inside each new block that comes. In this way, all the blocks are connecting together.
Extractors, or so-called miners, add new blocks to the chain through a process called mining. In blockchain technology, to add a new block to a chain, you need to validate that block. To validate the new block, miners must solve extremely complex mathematical calculations using special software. Each miner who manages to solve the problem earlier and adds a new block to the chain will get reward.
A node is the device or computer that each participant in the network has. All nodes receive a copy of all transaction data and information.
In short, given that it is a decentralized system and has no power or control over the central government, it is a public platform, meaning that in most cases anyone can help the network to approve transactions and in return, Get rewarded from it. When it and its participants can solve an algorithmic puzzle, according to the rules of cryptography, the transaction is valid and correct. Different blockchains use different methods to solve the puzzle and are also subject to agreed standards.
Who uses Blockchain today?
As a web infrastructure, needless to say, blockchain will be useful in our lives. But for now, the biggest use of this technology is in finance. The World Bank estimates that the money exchanged in this way was more than several hundred billion dollars.
In addition to Bitcoin, various other cryptocurrencies have came, including Ethereum, Tether, Ripple (XRP), and Bitcoin Cash. It has now cut off intermediaries from trading, and users can use Bitcoin programs to make purchases through Bitcoin.
Blockchain gives Internet users the ability to value information and enable the validation of digital information. Therefore, it can be in many cases. Financial services, retail, services, digital voting, digital identity, legal contracting and notarization, investment market, copyright, IoT, smart management, data management, stock trading and more.
We tried to acquaint you with it, how it works and how to use it to an acceptable extent. We explained that blockchain works decent and its data is hosted by millions of computers simultaneously, eliminating the risk of data being hacked or lost in the blockchain.However, blockchain technology is an emerging technology that has been extremely well received and, given its high potential, other technologies will surely depend on it in the future.