Everybody is talking about blockchain now. However if you try to make a research, it’s quite complicated to understand. We will explain you main principles of blockchain in easy simple way, to give you a clear vision of how it works and why it can change the world.
Giant book of records
Think about a big database, virtual book of records, open to everybody. Everyone with an internet access can add changes as they happen, new information is recorded and within seconds accessible to everyone else.
That’s basically what blockchain is. It is a giant shared virtual book of records, where each new record adds up to the end of the sequence as a “block”, in a strict linear order, and makes the chain longer.
Bitcoin virtual currency
Blockchain can be used to store and register many things: transactions, deals, contracts, loans, anything that has value and can have separate records. However now it is mostly known for virtual currency – such as Bitcoins.
Where are the money stored
The thing is that there are no actual money repository. Virtual money are just unique combinations of code, by which they can be identified. The system identifies this code and stores records about transactions.
All information about bitcoins you have is gathered in your virtual wallet as a combination of a very long secret code, that identifies your ownership of the line item in a relationship to your wallet. When you send money to another person or institution, the record about this transaction is recorded in a blockchain and you no longer have control over code lines of these virtual money.
Why is it so popular
The main advantage of blockchain is security. Blocks of information in the chain are encrypted and recorded in a strictly linear order. As the block is recorded, it can’t be changed. The data is stored not only in one place, but on thousands of hundreds of computers.
Data storage at multiple devices in different places is called decentralization. It makes almost impossible to hack the system or to cheat, thus this technology is considered to be so reliable and world-changing. The blockchain checks itself every 10 minutes. And, if somebody tries to correct data, it self-adjusts and changes the information back.
Experimental blockchain areas
Finance, smart contracts
Data and identity management
Supply chain auditing
Intellectual property protection
Crowdfunding, File storage
Blockchain might be the biggest invention since the internet. The ability to identify and verify the ownership of digital information in combination with high security and decentralization can shift our future.
With the blockchain and virtual currency people can make direct transactions without a bank or mediator. One person just sends money to another, a new block of information about this is created in a blockchain and operation is registered.