Perhaps you have already heard the term “blockchain,” but did not pay much attention to it, considering it a frivolous buzzword or technical jargon. But we believe that blockchain technology is a breakthrough with very serious consequences that will affect not only the sphere of finance, but also many other sectors. In this article we will tell you what a blockchain is, in simple words.
Blockchain (a chain of blocks) is a distributed database, where storage devices are not connected to a common server. This database stores a continuously growing list of ordered records, called blocks. Each block contains a timestamp and a link to the previous block.
The use of encryption ensures that users can only change those parts of the chain of blocks that they “own” in the sense that they have private keys, without which a record to the file is impossible. In addition, encryption provides synchronization of copies of the distributed chain of blocks for all users.
Imagine a digital medical history: every record is a block. This record has a mark: the date and time of the record. Firstly, it is considered mandatory to prohibit changing after the fact records , because it is necessary that records of diagnosis, treatment, etc. are not interpreted differently and remain in the original form. Only a doctor who has one private key and a patient who has another one can access the records. This information will then only be accessed by those to whom one of these users will give his /her private key (for example, a hospital or an individual specialist). Thus, for example, blockchain technology can be used in a medical database.
Into the technology of the blockchain system, the security at the database level was originally built. For the first time it was realized in 2009 as a component of the digital currency – bitcoin, where the blockchain is the main general register for all operations. Thanks to the technology of blockchain, bitcoin has become the first digital currency that solves the problem of double expenses (unlike physical coins or tokens, electronic files can be duplicated and spent twice) without using any authoritative body or central server.
Security in blockchain technology is provided through a decentralized server that places timestamps and peer-to-peer network connections. As a result, a database is formed, which is managed autonomously, without a single center.
Sometimes the technology of blockchain is called the “Internet of value”, and we think that this is a good metaphor.
Everyone can post information on the Internet, and then other people can access it from any part of the world. Chain blocks allow you to send any values to anywhere in the world where a blockchain file is available. But you must have a private key created by the cryptographic algorithm to allow you to access only those blocks that you “own”.
As for bitcoins, such keys are used to access addresses where some amounts in currency are stored, representing direct financial value. This implements the function of registering the transfer of funds – usually this role is performed by banks.