What is blockchain technology?

Blockchain is a modern technology that has grown in interest along with the popularity of cryptocurrencies. Let's look at what blockchain is in simple terms and why it is needed.

Blockchain is: the most important provisions

A blockchain is a decentralized digital ledger in the form of a chain of records where every transaction is confirmed by millions of users. The technology records transaction data on different computers in a secure manner. Cloud-based blockchain services make it easy to collect and integrate data from multiple sources and share it.

Blockchain can be used to create a secure and hacker-proof digital identity that is needed to verify personal information and other sensitive data.

Blockchain technology: a detailed overview

The history of blockchain technology dates back to the late 1970s, when computer scientist Ralph Merkle patented the concept of the Merkle tree. Some time later, a system for temporarily labeling documents was created on its basis. This happened in 1990, and was developed by Stuart Haber and W. Scott Stornetta. The technology has been constantly evolving and became more popular with the advent of cryptocurrencies. The term blockchain first appeared as the name of a fully replicated distributed database in the bitcoin system.

The original goal of the blockchain was to create a decentralized system where information could be confirmed and stored without the need for trust in central authorities. Today, blockchain technologies are used in various financial transactions, cybersecurity, user identification, banking, and other industries.

The idea of the technology is quite simple: a distributed ledger or database is run simultaneously on many (sometimes millions) of nodes distributed around the world among different users and organizations. The majority of the network participants must confirm that the recorded transaction is true. If you want to understand the technology more thoroughly, you can read the blockchain guide for dummies.

How does blockchain work?

A blockchain transaction reflects the movement of physical or digital assets in the blockchain network. This information is recorded in the form of a data block and may include various information: the date and place of the transaction, who participated in it, the terms of execution, and others. Blockchain login is safe and secure. Data is stored in blocks in chronological order and protected by cryptography. The person responsible for storage is called a validator.

What does a blockchain consist of?

The main elements of the blockchain include:

• Block. It has a header that includes a hash of the block itself, the previous block, transactions, timestamps, or metadata. The block also contains information about transactions associated with the hashes specified in the header.

• Transactions are records of the exchange of value between two or more parties. They are grouped into blocks and added to a common chain.

• Nodes or nodes are ordinary computers that run the software needed to maintain the blockchain network. Their task is to mine new blocks.

A node can be any person who has installed the necessary blockchain software. This prevents unauthorized access.

Decentralization is the main idea of blockchain technology

A blockchain is a special database often referred to as a decentralized digital ledger. It is supported by many computers around the world. Decentralization means the transfer of control and decision-making from a centralized entity (person or organization) to a distributed network. It is thanks to decentralized networks that participants will not trust each other.

In cryptocurrencies, the blockchain wallet is the digital interface, allowing users to securely send, receive, and store digital assets.

Consensus mechanism - coordination of machines and people

Network security and data consistency between nodes depend on the consensus algorithm. It is necessary to maintain the integrity and security of the blockchain. Thanks to these principles, the system does not require administrators and centralized storages. The consensus mechanism confirms the correctness of the information presented in each block of the system.

There are many different such algorithms, but the most popular are Proof-of-Work or PoW and Proof-of-Stake or PoS.

What are the types of blockchain networks?

There are the following types of blockchain networks:

• Public - built on trust and transparency. Anyone can join the network and

• join the verification of a particular transaction An example is the Bitcoin blockchain.

• Private - have limited access controlled by a single organization.

• Hybrid - strike a balance between privacy and transparency.

• Consortia - several organizations participate, but access is limited.

There are also sidechains, which are additional blockchains that can be linked to the main blockchain. They allow solving certain tasks without overloading the main network.

What is blockchain used for?

Blockchain has become the most popular technology in the world of digital money. However, this system is used to store and transfer data in various fields: banking, gaming, stock exchanges, online voting, investments, land registry, and others. Blockchain ensures data integrity with a single source of verified information, eliminating duplication of data and increasing its security.