Blockchain is a public database of transactions committed in the Bitcoin system. With its help, each user can find out how much Bitcoin was at a particular address in a given period. Read more about what Blockchain technology is. Read on.
Destination
Blockchain can be used wherever distrust arises between participants. For example, in sales transactions there is always a risk that the seller will not receive the money, and the buyer will not receive the service / product. Using the system, you can verify the accuracy of documents, goods, services or companies.
Blockchain: technology description
Blockchain is a kind of accounting database that stores information about events from real life. But at the same time, it differs from its analogues in a high level of openness and reliability. It cannot be faked or deleted, but all recorded events can be checked. Consider the essence of technology in more detail.
Blockchain is a method of recording all public data (transactions, agreements, contracts). Its peculiarity is that information on all operations is not stored in one place, but scattered across thousands of computers. So any user can access the materials.
All data is combined using mathematical algorithms into blocks, and the latter form a chain. Each block contains a hash of the previous one. This chain starts from the first block in the system and lasts until the last. Editing information that has been online for a long time is impractical. It is necessary to rewrite all the blocks. Chain length is determined by complexity, and not by the number of elements.
The hashing method does not leave detailed information about the transaction, but only confirms the fact of its existence. After updating the data, it cannot be changed. You can only add new information.
Benefits
The distributed nature of the database makes it protected from hacker attacks and ensures data privacy. Information from the hash cannot be copied. But even if the data is changed at some stage, they will not correspond to the digital signature. The system will immediately give an error.
Scope of application
Blockchain - anti-theft technology. If the records on loans issued were recorded in the system, it would be possible to prevent the provision of loans using fake documents, fraud with mortgages and car loans. Some countries are already considering introducing a system for these purposes.
To date, Blockchain technology is mainly used in cryptocurrencies (bitcoin, litecoin, nxt). Using these examples, the full power of the system and its limitations became clear. In some countries, the system is used to record rights when purchasing works of art.
Already 42 of the world's largest banks (in particular, Bank of America, Morgan Stanley and others) have created a consortium of R3. They are developing a new direction of Blockchain (technology of mobile payments and other financial flows). A similar company DAM has already been created by 13 organizations (ABN AMRO, BNP Paribas, JPMorgan, etc.). She is also involved in the implementation of the platform in the financial industry. R3 is already conducting experiments to exchange bitcoins through a worldwide network, without the participation of third parties.
In 2015, Goldman Sachs and IDG Capital Partners invested $ 50 million in Circle Internet Financial, a startup that aims to use Blockchain to improve the quality of transfers in bitcoins and dollars.
Blockchain technology has been successfully used by Everledger to develop a guarantee system for diamond mining companies. Bought will be able to learn the history of any diamond. For these purposes, Everledger invested $ 850 million in a database.
The Estonian company Guartime, which is a leader in the processing of digital data of the country, has created the Keyless Signature Infrastructure base built on bitcoins. Thanks to this innovation, the government can protect the information of residents of the country in 1000 Internet services.
That is, the demand for technology is constantly growing. There is no such activity in Russia yet.
Where does such demand come from?
In the banking system, one powerful device monitors all transactions. Implementing a large number of computers is resource intensive. The Blockchain system, the technology description of which is presented above, makes it possible to get rid of intermediaries, manual data processing, speed up processing, and reduce costs. Open access to information is useful for the regulator. The state will be able to more easily levy taxes. If banks speed up the transaction process and reduce costs, this will make the service more efficient and cheaper. International translation will be instant.
Other projects
There are some more interesting startups using Blockchain:
- tØ - a platform for trading in the Central Bank;
- BoardRoom - a system for corporate governance;
- UjoMusic - management of rights to works of art;
- Provenance - a system for controlling the origin of goods;
- BitProof - document certification technology;
- EverLedger is a diamond accounting system.
This is not the whole list of startups using Blockchain and Bitshares technologies.
Qiwi Introduces Blockchain
In the Qiwi system, information was previously transmitted centrally. This led to a high load and a large number of failures. Blockchain implementation will increase technical safety and reduce processing costs.
Qiwi payment system wallet contains blockchains. A checksum of the previous one is embedded in each subsequent link. As a result, the blocks form a chain in which it is impossible to change or remove something.
The next payment system into which Blockchain will be implemented is WebMoney wallet. He plans that customer identification will take place along the blockchain. This will allow new members of the system to confirm their identity without visiting the office.
Sberbank implements Blockchain
The largest bank in Russia intends to join the R3 consortium in order to integrate services based on cryptotechnology. This will improve transaction security and reduce future dependency on SWIFT. Methods of protecting the database system virtually eliminates the possibility of spoofing records. At the same time, the database is characterized by a high level of information distribution and openness.
Sberbank plans to use the new system for transfers between subsidiaries and other banks. We are not talking about introducing our own cryptocurrency. In addition, the Central Bank has a negative position on all surrogate money.
In theory, Blockchain technology can mitigate some of the political risks. When sanctions were only introduced, banks feared they might be disconnected from SWIFT. The use of Blockchain increases the stability of operations, since the system does not have a single regulator.
Barriers
The implementation of Blockchain prevents legal uncertainty in the use of the system. Venture investors see Russia as a supplier of managers and labor. According to opinion polls, only 1 out of 5 Russians knows about the existence of Bitcoin. Of these, two-thirds of the population consider cryptocurrencies to be something illegal. These problems are already being actively addressed in other countries.
Blockchain Technology: “For Dummies”
Startup Blockstrap will hold a series of free seminars on block technology for residents of Turkey, Germany, Australia, the Czech Republic and England. The course is designed for people who want to learn more about public registries, for software developers, people interested in the digital economy.
As part of the program, students will learn about distributed systems, circuit technology and learn how to create their own applications. Participants are only required to have basic knowledge about creating sites and developing applications in general.
Cryptographic keys
Cryptographic keys are the foundation on which Blockchain technology rests. What it is? The key is a very long number. For example, this: 1731695423709850868. You can decrypt it only through a set of hash functions. Only one key is suitable for each entry. Another important feature: when replacing at least one element in a block, the set of numbers changes completely.
Network
Information about the blocks is stored on users' computers. All of them are equal. Upon entering the network, the user connects to all other computers. It is important that this network is not tied to geography.
Having received the data, the user checks it and, making sure of the reliability, saves it on the network, and then passes it on. Participants are divided into groups: users creating new records, and miners creating blocks.
Information on the network is distributed as follows: "the user with key B transfers 300 monetary units to the user with key A". Data is open but encrypted at the same time. Knowing the car key, you can check whether it is pledged, but you won’t get the name of the owner. Similarly, here.
Miners collect records, then they are checked and recorded in blocks distributed over the network. Ordinary users gain access to these blocks in order to store them at home, generate the correct data and check others.
Until a record is registered, it is considered invalid. The participant may use it at his own risk. This entry can be canceled at any time if it is found to be fake.
Key Mining
A miner is a user who creates new blocks. It collects records from the network, generates a header and generates a key. Consider a brief example.
Suppose that after the first calculation, the key has the form: "311630826946518243738". According to the rules of the system, it must begin with zeros. You need to edit the source data. For these purposes, the nonce field is provided in the block header. After making adjustments, its value changes from 0 to 1. Recalculation will occur several million times until the generated key meets the requirements. Only after that the formed block will be sent to other Blockchain users. The description of the technology is quite simplified, but it allows you to convey the principles of the system.
The trick of mining is that the probability of finding a key is always the same. That is, it is impossible to buy. Each block has only one key. He needs to be found. This is what miners are doing. They get paid for their work. The key generation procedure, on the one hand, complicates the work, and on the other hand, it makes it almost impossible to form a fake block.
Recommendations for beginners
- Despite the great potential of the technology, you should not try to fasten it to each Blockchain. The fifth wheel has not helped anyone yet.
- There is no need to develop your own Blockchain. It is better to modify the current scheme to the needs of your project.
- If you decide to implement Blockchain, then you need to navigate immediately to the whole world. Only then can the full potential of the project be revealed.
Conclusion
In a few years, Blockchain technology will become the same everyday occurrence as the Internet. What does it mean? Conventional services and goods can be obtained using the system: apply for a passport, register a car, get a loan, buy tickets, etc. A person will only need to provide a key to the system to receive or verify the service. This will improve the quality of life.