How blockchain technology works and where it can be applied

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Content

• What is blockchain
• How blockchain works
• Where can blockchain be applied
• Pros and cons of blockchain
• Conclusion
• Sources of

The emergence and development of cryptocurrencies has provided humanity not only with a new form of money, but also with many different technological solutions. One of them is the so-called blockchain. It is this technology that underlies the work of cryptocurrency. Later, they learned to apply blockchain in other areas of activity.
Here you will learn about how the blockchain works, and in which areas of activity it can be applied.

What is blockchain​

Blockchain is a technology of a decentralized system for performing various operations with data, in which all information is presented in the form of a chain of data blocks. The blockchain records all operations that are performed with data and provides access to this information. The operations that take place within the blockchain system are also called transactions.
This technology uses a peer-to-peer system, the participants of which are always in the same conditions. Participants in a blockchain system have equal access to the entire data and information chain that has been contained in it since its inception. The data in the blockchain is encrypted and requires a special private key to access it.
The blockchain idea belongs to Satoshi Nakamoto, a programmer from Japan. He formed it back in 2008. A year later, he put the blockchain system into practice - it formed the basis for bitcoin, the world's first cryptocurrency.
To conduct transactions within the blockchain, the presence of any controlling third parties is not required. All data inside the system is reliably protected from deletion or hacking. Blockchain is a fairly versatile technology; it can be used in various fields of activity - from trade to medicine.

How blockchain works​

Transactions within the blockchain system are organized as follows:

• The user sends a transaction request to the system. To do this, he generates and sends a special key in which information about the operation is encrypted - type, purpose, parties, and more.
• The request goes to the P2P network, consisting of computers participating in the system. These computers are also called hosts. They analyze information and confirm its accuracy
• The network of nodes verifies the transaction and confirms the user's status according to a certain algorithm. After that, the process of transferring information itself takes place - for example, a transaction in cryptocurrency or the signing of a contract
• After a successful transaction, a new block is added to the chain. It contains all the details about the operation and a link to the previous block. Data in the blockchain cannot be changed or erased

Where can blockchain be applied​

The most common use of blockchain is through cryptocurrency. It is a special form of money that is created and stored within a data block system. The cryptocurrency does not depend on any organizations and does not exist in real form. Blockchain allows you to conduct monetary transactions between system participants in a secure mode and control the amount of coins available for use.

Later, the blockchain began to be used in other areas of activity. For example, it can be used to conduct financial transactions and conclude transactions - such a system will increase reliability and reduce costs. Blockchain can be used to store information and exchange it between organizations, for example in healthcare or copyright. You can use it when conducting a vote - such a system increases its transparency and prevents falsification of the results.
In Russia, there have been talks about the development of blockchain systems for a long time. The state, banks and enterprises are interested in this technology and its application. For example, the blockchain has begun to be introduced into local self-government systems in Moscow and Kazan. It is actively used in their work by Sberbank, Alfa-Bank and VTB. In February 2018, Rosreestr registered the first contract for participation in shared construction using the new technology.

Pros and cons of blockchain​

Blockchain is a very promising and convenient technology. Its development is helped by the following advantages:

• The data block system is simultaneously reliably protected from outside influences and completely transparent for all participants
• Data blocks can easily track transactions and data right up to the moment of chain creation
• System participants cannot in any way influence the result of the transaction and change it in their favor
• Operations become cheaper as no additional intermediaries are required

However, the use of this technology is greatly hampered by its disadvantages:

• It is quite difficult to organize a blockchain system - you need special equipment and software. It can also take a lot of electricity to maintain.
• The system is quite difficult to implement in an already operating enterprise or organization - it is necessary to completely redesign all processes and train employees
• The system requires uniform rules and regulations - it takes a lot of time to develop them
• You also need to take into account the general distrust of people and organizations in the system - many still do not understand its essence and principle of work to the end.

Conclusion​

Blockchain technology is developing more and more actively and captures new areas of human life. Experts and companies see it as a development not only for technology and financial processes, but for all mankind as a whole. Therefore, the sooner you understand how this technology works, the easier it will be for you to use it.

In short, blockchain is a technology for decentralized transactions with data represented as a chain of blocks. It is implemented as follows:

• During the operation, the participant sends a request to the system in the form of a special key
• The computers included in the system analyze the information and confirm the data
• After the transaction is confirmed, a new block is added to the chain, linked to the previous one.
• All participants in the system have an equal level and the same access to information.
• Data already added to the blockchain cannot be deleted or changed

Due to its reliability, simplicity of operations, no need for external control and the impossibility of interference from the participants, blockchain has found application in a wide variety of areas - from cryptocurrencies to real estate transactions.

Sources of​

What do you think about blockchain and how it is used? You can share your opinion about them in the comments.