Already, many investors and bankers are talking about blockchain technology as a technology of the future, which will affect the future of the world even more than the appearance of the Internet. This is by no means a shaking of the air, only in 2016 in projects based on the blockchain invested more than a billion dollars. Next, we will write about what is blockchain, the relationship with bitcoin, in which directions are already used and will be used in the future.
Just about the blockchain
The English word blockchain contains two words: block and chain. Each transaction in this technology is recorded in the system as a new link in the chain that automatically captures digital information about the entire circuit. Another blockbuster is called a distributed registry.
Explaining in simple words how the blockchain works, experts compare each transaction with a microscopic DNA molecule containing information about the entire living organism. Due to what unauthorized data change is impossible – the system does not agree and reject the operation, as in biology, where foreign cells and tissues reject the human body.
What is provided by the general availability and security of the detachment
- Huge computing power included in the mining.
- The most complicated mathematical algorithms.
- Cryptographic programs.
Theoretically, it’s possible to hack the block system. However, in practice, the resources spent on this will be much higher than the benefits gained, it is this aspect that stops all intruders.
Thus, blockchain makes it possible to store data on financial transactions, legal obligations, property rights, providing full transparency and universal accessibility for familiarization, but at the same time reliably protecting against any forgery, hacking and so on. In an even simpler version, it can be said that the technology of the block-system is a kind of glass cube with a constantly switched-on surveillance camera-it can (under the supervision) put something new, but when you try to change or substitute the content, this will immediately be visible to any observer.
Bitcoin and block
Bitcoin, fairly rightly called a possible financial pyramid, and ignorant people transfer their attitude to the pyramids for blockchain. Similarly, it is mistakenly considered a type of electronic money. Why is technology not synonymous with bitcoin?
There are no differences between the blockchain and bitcoin in the usual sense, because these are generally different concepts – like MasterCard and SWIFT. It’s just that for the first time the blockchain has found a demanded application precisely as a database of transactions of crypto-currency of bitcoin. At the same time, the chain of blocks served as an open accounting book, where operations with bitcoin were recorded and cannot be forged.
Today, on the one hand, the concepts of block and crypto currency remain inseparable, since this technology is used both in transactions with bitcoin and other crypto-currencies. And it is used as widely as possible: from paying for simple purchases to deposits on online casinos (get more info here).
On the other hand, the potential application of blockchain technology is incomparably broader, it can be used to create a huge number of databases, registers, books of inventory and services for business. And including new payment systems operating legally (controlled by government authorities).
Scope of blockchain technology
The essence of the chain of blocks, as a public, distributed and reliable database makes the use of blockchain very attractive for companies working in various fields. Currently, there are already a number of extensions for the development of business applications on the block, providing:
- Secure network administration, eliminating MIM hacker attacks (“the person in the middle”) and removing the problem of “single administrator”.
- Storage of digital certificates, which completely protects users’ access to websites (in particular, excluding password interception).
- Safe bilateral transactions without involvement of a guaranteeing third party (law firm, notary, bank, etc.).
- Fixing the time of placement of documents, allowing to solve issues of patenting, copyright, etc.
- Confirm the authenticity of the product (product) with the help of a secure certificate.
- Confirmation of rights to any property.
- Creation of public electronic business cards, information on which is automatically updated even after “distribution” on Internet resources.
- DNS system, invulnerable to DDOS attacks, and much more.
On the basis of the block, you can create any open registries where transactions will be recorded, and the verification of payments will be provided by the system itself. For example, in real life, a notary does not need to receive confirmation from his colleagues (not only from other countries, but even from his own city) to make a specific entry in his book, for example, when issuing a power of attorney.
According to the technology blockchain, confirmation is necessary, plus the data must be encrypted with a special code, after passing them through the miner (you can say, by hanging the lock on the chain block created). However, the proponents of privacy cannot be afraid – only information on the operations performed will be recorded in the system, while private information (identity, etc.) will not be available for open access. Technology is also great for use in e-government.