What is blockchain: about the technology of the future in simple words

Let's understand - blockchain, what is it in simple words, what is its essence and what role does it already play in real life?

Can you imagine a modern society without banks, notaries, various registrars and other intermediaries in financial transactions between people? Probably, without them there will be a financial collapse and utter confusion.

But more and more information about the new system, which they began to call the invention, appears, akin to the emergence of the Internet or mobile communications. Will it enter our life as well or is it just another financial fiction?

The first acquaintance with the new technology

The first acquaintance with the new technology

Blockchain what does this mean and where does it come from? Translated from English sounds like a "chain of blocks", that is, it is a database that contains useful information and is stored on many computers at the same time. The data is combined into blocks that form a chain, and together they make up the overall picture.And when you change or add any information, the database is automatically updated "immediately and everywhere." This information may be available to any user, but the control of the control belongs to one person.

Who thought of such a system? Japanese programmer Satoshi Nakamoto is considered the creator of blockchain and bitcoin (cryptocurrency nowadays), he “brought the world into the world” a new technology more than 10 years ago, in 2007.

However, researchers argue that the idea appeared even earlier, at least for a decade. Nakamoto only combined a multitude of developments into one method, which in no way detracts from his achievements. Since the identity of the Japanese is still unknown to the wider community, it is believed that this is the pseudonym under which the group of programmers works.

The young Russian programmer, 21-year-old Vitaly Buterin, picked up the baton. He created a platform that allows anyone to create blockchain services and applications that can be embedded in any sphere of life.

The technology is developing at a rapid pace, it is not only talked about, but also successfully used in modern reality.

The advantages of this technology

The advantages of this technology

Now let's look at what positive aspects blockchain technology has in simple words.

Decentralization

Any information related to different areas of people's lives is stored somewhere. Previously, these were paper archives, now - electronic. As a rule, they have a permanent "place of residence", that is, they are tied to one server. The main disadvantage of such storage is that any document or data, be it on paper or in digital form, can be removed or corrected. That is, there is a clear abuse in favor of any person.

With a blockchain such a chip will not work. The main point is that the database is distributed across many computers in the world, there are thousands of them, and sometimes millions. Try now to find and fake information on all these media!

But there is a nuance - a single server does not really exist, but the miners are united in communities that are concentrated in one place. And this is a weak point and can be used by hackers.

Security

Hacking this system is simply impossible, because no one owns such computing power to cover all the computers at once where data is stored.

In addition, another security algorithm has been created - encryption and digital signature.For signing using public and private keys. The first one verifies the authenticity of the signature, and the second is super secret and is used to create it. Encryption is done with the help of hash functions; for an outsider, it looks like a set of letters and numbers in a random order.

Availability

Anyone can use the information, since it is laid out in the public domain. Some of the information directly involved in the base can hide.

On the one hand, openness of databases is a big plus, but on the other hand, many companies do not like it, because a large number of users, including competitors, can learn about their trade secrets.

Total absence of intermediaries

Modern society and the step can not step, so as not to pay a percentage for a particular service. Unfortunately, there has been no alternative so far.

In the blockchain system, users work directly with each other. To perform trading operations and transactions no more intermediaries are needed, which not only simplifies the process, but also significantly reduces the cost.

How and where is it used?

How and where is it used?

With the notion of what a blockchain is, we decided.Now it would be nice to learn about how to use it. Currently, this advanced technology is just beginning to gain momentum and is still tightly connected with cryptocurrencies. However, many developed countries and advanced companies have already adopted a system, have “tasted” the benefits and are trying to introduce it into their economies, but so far they are at the very beginning.

To switch to a new system, it is necessary to develop and form a legislative base, while it is not clear how the blockchain will cope with the existing legal environment and whether it will be possible to integrate it into the world economic legislation.

Digital certificate storage

Cryptography (encryption) will perfectly protect any information from illegal reading, alteration or distribution. It is impossible to obtain unauthorized access to certificates, as they are not stored on the server, but on the network. Finding user passwords is now also very difficult.

Identification and confirmation of access rights

Some foreign corporations have introduced a system of access rights and identification of their employees using the blockchain.As it turned out, it is much cheaper than other methods.

Permanent verification of documents for identity verification takes a lot of time and effort. Blockchain perfectly cope with this role.

Confirmation of authorship

Creative people can easily confirm their copyright if they create their works in digital form with the help of special identifiers and certificates. It is also possible to transfer ownership rights from author to buyer.

To do this, it is enough to enter the necessary information in your block, and the data will immediately spread across the network. There are already several active platforms that are actively used.

Operations with gold, raw materials, goods

Now individuals can safely buy gold and silver bars. Developed several operating platforms that allow you to move, convert, store any form of money, raw materials, goods.

In international trade, blockchain was first tested in 2016. Ireland exported a large batch of dairy products to the Seychelles company, a British bank held a letter of credit of $ 100,000. Under normal conditions, such a transaction takes at least a week, in this case, the whole operation lasted 4 hours.

E-government

Many countries, for example, Russia, Great Britain, Sweden, India, and the United Arab Emirates, through the blockchain, are implementing real estate registration and land registry management. In Estonia, it can be used to apply for a residence permit and other state services.

Also, this system begins to be used for various kinds of voting, for example, on the stock exchange. Some countries are thinking of introducing a system for elections. And China is going to transfer social insurance to the blockchain.

In Russia, the transition to the blockchain will be started in 2019 after the creation of regulatory documents, now large banks under the auspices of the Central Bank have created the Masterchain platform in order to increase the efficiency of financial management.

In Moscow, the project Active Citizen, which was created to vote on improving the life of the city, is becoming popular.

Stages of work

How to work?

How does the blockchain work in practice? Let's look at a simple algorithm for transferring cryptocurrency between two users.

Sending a transaction to the network

The decision on the transaction is called a transaction. If ordinary users need to transfer a cryptocurrency from the payer to the recipient, then they create a new record in the network - a transaction.The blockchain system forms a “key” for access to the sent transfer, which the payer transfers to the recipient.

If you say in simple words, then let's say Maria Ivanovna wants to transfer a certain amount of money to Vasily Petrovich. The difficulty lies in the fact that both citizens live in different countries, and the bank takes a large commission for the transfer. Therefore, an advanced citizen decided to use the blockchain and sends the transaction to the network.

Formation of transactions in the new unit

The transaction is transferred to the network using a special algorithm and is formed into a data block that contains information about the transfer amount, date, time and other information about the payment sent. The block is necessarily connected with the previous one.

Distribution of blocks for verification (validation)

A new link in the chain is instantly sent to all key nodes where it is being tested. The transaction and user status are confirmed and automatically reflected in all nodes.

Block hit in chain

After confirmation, the block is entered into the general information database. The chain is updated, and information about it is entered into the registry. Now it is impossible to delete it from the system.

The fact that the operation took place becomes known to a wide range of users, but the contents of the link itself are known only to those who own the private key.

The final stage of the transaction

At the last stage, Vasily Petrovich is transferred a payment, and a confirmation of the operation is sent to both participants. Vasily Petrovich can get access to the cell with the help of a unique key.

How to make money on the blockchain?

How to make money on the blockchain?

At present, not every user can use blockchain technology, as long as it is available only to the most advanced companies and corporations. But it will take quite some time, and the system will enter into use and will be available to everyone.

This is a profitable platform and investment in this area will bring high returns. The advantage is that these technologies are new to the country, which means that the market is not full. Therefore, do not waste time, you want to be in trend - open your network resource working on advanced blockchain technologies.

Exchange of tokens for cryptocurrency

Probably, you have already heard about Bitcoin and you know that this is the name of a cryptocurrency system. The past few years, his popularity has grown immensely.Transactions are carried out using the blockchain system, but it’s not the money we are used to — it’s rubles, dollars and other currencies, but domestic ones, which are called tokens, that are issued exclusively within the system.

They pay only in this network, and they can not be displayed in the real world. If the network is in demand, then tokens grow in price.

At their core, tokens are somewhat reminiscent of stocks for which dividends are accrued. That is why investors acquire them in order to get high profits. For example, the second most popular cryptocurrency system “Ethereum” until 2016 worked mainly on domestic financial transactions, and the price of the token did not exceed $ 10.

However, relatively recently there have been radical changes in the system, it has become more sophisticated, its field of activity has expanded significantly. Since "Ethereum" has become in demand, then to work with it we need tokens, their cost today is almost $ 300. What is called, feel the difference.

Specialization change

It is necessary for all IT specialists to understand the basic principles of the blockchain and learn how to work with it.Now professionals in the newest technology earn from 150,000 rubles, they are in demand, since very few people “plunged headlong” into this system. Now the largest banks and corporations will tear off blockchain experts with their hands. Do not miss your chance.

Cryptocurrency lending

Credits in real life have always been and will be in high demand. Among advanced users of high technology, lending to cryptocurrencies is gaining popularity.

There are already quite a few operating platforms that issue loans in the cryptocurrency to anyone. These funds are then used by borrowers either to conduct financial transactions on cryptocurrency exchanges or to purchase tokens.

Creating bitcoin payment services

The network has a lot of exchanges that deal with cryptocurrency transactions: exchanges, purchases, sales and other operations. After each transaction, the owner of the exchange receives a percentage for providing a site for trading operations.

Also gaining popularity in the network payment of services or goods by bitcoins, ethers and other cryptocurrencies.For example, virtual money is accepted by bookmakers as payment. That is why such services are growing by leaps and bounds, even pizza can be ordered by paying for it with a cryptocurrency.

Registration rights

You can register copyright or legal rights on the blockchain only on a few operating sites, but this is for now. Soon the people will try out the benefits, and the popularity of such platforms will inevitably grow.

If you have the knowledge and the means, then you can start promoting such sites right now. In a year, your project will not only pay off, but there will be no end to customers.

Conclusion

Blockchain is the technology of the future, it has great prospects and opportunities. With its help, one can gain independence from intermediaries that exist at the expense of the population, defeat corruption, make data storage safe and facilitate financial transactions.

This system is already used in trade, business, document flow and even in government. The only drawback of the system is the high cost, but this is a matter of time. Remember how “gold” for the price were the first personal computers and mobile phones.

However, time will show how optimistic the expectations will be, but the fact that the new technology is revolutionary is a fact.

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