How to eat blockchain without choking
In this article I will try to explain to you what blockchain technology is all about.
Blockchain is the backbone of any cryptocurrency, and anyone who wants to understand the crypto world will find it very helpful to know how it works from the inside.
Annotation.
Why is humanity always drawn to change? Why can't we sit still? Because there are problems to be solved.
If a technology is created, it means there is a problem that it solves. But what does blockchain technology solve?
Let's move away from technology a bit and move on to people. What is the problem with people?
People's problem is trust in each other.
Throughout our history, only people we know well enough to trust each other. But we have always distrusted strangers.
To solve the problem of trusting strangers, people invented things like laws, documents, police, banks, signatures, and many other things that somehow regulated the sphere of trust.
However, all of these things are heavy-handed and unreliable. Laws change, documents are forged, police are bribed, banks exceed their authority. On top of that, it costs enormous amounts of money to maintain it all.
So what do you do when you can't trust those who are supposed to be trustworthy?
Trust a disinterested party: the program. A cold and calculating machine that executes specific instructions.
That's what blockchain was invented for.
What is blockchain?
Blockchain is a computer you can trust.
It is a database, which is a continuous chain of data fragments - blocks.
The blocks contain information about their number, their hash sum, and the hash sum of another block. Changing any information in a block will change its hash sum.
The hash function is a basic concept in blockchain. It helps protect the blockchain from hacking.
It is an algorithm that converts data from a block into a number. This number is called the hash sum (or simply hash).
To change something in the blockchain you need to decrypt the hash sum. This requires time-consuming calculations.
That way the data in the blocks is protected from change, and to cancel your cryptocurrency transfer to another person, for example, requires a lot of resources, which is not profitable.
Since each block contains data about the previous block, to change any block in the blockchain, it is necessary to change all subsequent blocks as well.
If there is already a continuation after the block to be modified, it can be a very time consuming process. The point is that usually copies of blockchains are stored on many different computers independently and each device must go through complex calculations to change the hash sums of the blocks.
Blockchain ≠ Bitcoin
Many people are familiar with the words "bitcoin" and "blockchain. And some people think they are the same thing. But they are not!
Bitcoin is just one of the first implementations of blockchain technology, which has many other applications, from the banking sector to independent voting.
Why do we need blockchain?
As written above, blockchain has many applications.
But the main point of blockchain is decentralization. All its users have the same rights in the network. There is no need for any controlling party, because the blockchain itself takes care of all the problems (e.g. the problem of double spending).
Thus, in finance, for example, blockchain can replace a modern remittance system because it does not require a bank or other organization to control transactions.
Double-spending is the re-selling of the same funds.
This is the main problem that any payment system needs to solve, because it is impossible to allow the user to spend the same money in two places at the same time.
Blockchain problems
Blockchain has a number of specific problems that make it difficult to use:
1) Constant growth in the size of blockchain files. The larger the blockchain, the more labor-intensive it is and the more difficult it is to store
2) The limitations of blockchain speed and performance. Right now, most are severely inferior in speed to regular bank transfers.
It is to solve these problems that new types of blockchain are being developed, including cryptocurrencies.
At the same time, there are a number of features that no blockchain system can do without:
1) Data is stored in a blockchain structure in which each block is linked to the previous block. Changing information in a block is impossible without making changes in all subsequent blocks.
2) Participants interact with each other in a P2P format.
3) A consensus mechanism is established.
P2P (peer-to-peer) - a computer network where each user has equal rights.
Blockchain is an extremely useful technology with its own pros and cons.
It is still evolving and improving. Many projects are creating their own forms of blockchain that solve the problems this technology has.
The world is changing, and the day when blockchain will be used everywhere is not far off. It is only a matter of time.