What is Blockchain?

Before moving on to blockchain development solutions, you need to understand what blockchain in general is? In 2017, blockchain became a subject of academic interest when the first blockchain research institute opened in Toronto. About 30 leading experts have started developing various projects related to this technology.

A block is part of a blockchain - What is Blockain Technology
Image created by Market Business News.

Blockchain is a reliable way to store data about deals, contracts, transactions, and everything that needs to be recorded and verified. Today, blockchain has penetrated almost all spheres of life and is ready to radically change the financial system of the state and significantly simplify the work of medium and large businesses. Blockchain is not a secret technology: there are a huge number of articles on the web about how it works and how it works. We have collected the most interesting and necessary facts in one article that you can link to when you are asked: “What is a blockchain?”

This technology has been gaining attention since 2008. At first, the blockchain was associated only with the Bitcoin cryptocurrency. But someone saw in time its versatility and great opportunities.

Principle of operation

The essence of the blockchain as a chain of blocks can be compared to a puzzle. A block is an array of data, it contains information about transactions that entered the network after the creation of the previous block (for about the last 10 minutes). Each new block of data is attached to the previous one using complex mathematical algorithms, which allows these blocks to be held together for centuries. To create a new block, it is necessary to calculate its cryptographic fingerprint (hash) that satisfies certain conditions.

This process is performed by many computers operating on the same network, which solves some complex crypto-problem, during which it is necessary to calculate the hash (output) of the block header in the blockchain. In other words, choose a special code that will allow you to get a hash containing a certain number of zeros at the beginning of this hash. The process of finding blocks is called mining. When the problem is solved, a new block is formed, which can neither be deleted nor changed. But each network user can see all the information in the blockchain. As if you were solving puzzles for an online broadcast in front of an audience of millions.

All the reliability and security of the blockchain rests on cryptographic hashes. The hash is issued by the system in the format of a huge number. For a given set of data, the hash function yields one hash that has two significant properties:

  •       the first is that, even with the key, it is impossible to find out the original data set;
  •       the second property is that it is almost impossible to find another set of data that gives the same hash.

Here is the case when the medal has two sides: openness and security. In addition, the resulting hash entirely changes with the slightest change in the data.

Blockchain block data always open

This is one of the main rules of technology. All blockchain block data is open to everyone and always. They are easy to check and easy to track any change in information. Therefore, you do not have to guess how reliable the information you are interested in is – checking their authenticity is simple and affordable.

We in the Peiko company understand everything about the deep principles of the blockchain. And what does it look like in real action for ordinary users? Everyone knows how email works. Imagine that one letter is equal to one monetary unit, and we can send this money to a specific addressee. Only, unlike e-mail, we have a certain limit on letters (availability of funds) and we can send one letter to only one addressee. After that, the limit of our letters will immediately decrease, and information about the sent transfer will be recorded both by the sender and the recipient. At the same time, all letters are securely protected. Information about a completed transaction cannot be deleted or changed. In addition, all network users see it – the recipients of your e-book.

Our “letter” can be not only a monetary unit but also security, a share. Anything that needs to be recorded and checked.

Completely decentralized

The blockchain is completely decentralized, there is no authority over it that can prohibit transactions or block access to the blockchain. No third party is needed to confirm the transfer of information. If we transfer money, then confirmation from the bank is required, if we send property rights, then the participation of a notary is required. Blockchain eliminates the need for the involvement of a third trusted person.

Today, blockchain is no longer associated with bitcoin and is becoming an independent technology that forms the basis of new applications and systems. Experts are sure that just as horse-drawn carts gave way to cars, blockchain is becoming a logical evolutionary continuation of traditional accounting tools. In addition, if earlier they talked about the blockchain as a data store, now its capabilities are becoming much wider because it can also execute programs. In cryptocurrency, this can be seen when making transactions with conditions, for example, user A will transfer 12 BTC to user B if today is April 15, 13:30.

There is no magic in the blockchain, only mathematics. And yet, one important property of this technology never ceases to amaze even the most prominent experts: the possibilities of the blockchain are limited only by human imagination. Therefore, time will tell what else the blockchain is capable of.

Interesting related article: