Blockchain: what is it in simple words

What is blockchain? What are the operating principles and scope of the system? Advantages of blockchain and what awaits the system in the future?

Blockchain is an innovative system that appeared not so long ago, but quickly gained popularity and is being actively implemented in various fields of activity. Blockchain what is it in simple words? Let's break down the definition and see how it all works.

If you do not go into technical issues, then the technology consists in a structured database, where some rules for building chains of financial transactions and data access are used, which prevent fraud and theft of confidential transactions. When working with it, two parties are involved, no intermediaries are involved in transactions.

Conventionally, the technology can be compared to a simple safe, in which every authorized user can put something. But other users see what exactly you have left for storage. But you can withdraw a deposit from a safe only if you have the appropriate access rights for this, in other words, a key that is known only to the person to whom it is intended. It is not possible to crack or destroy the safe.

The technology provides access to the following information:

• Changes in human pressure.
• Ensuring transparency in the conduct of elections.
• Storage of important information relating to research work.
• Degree of air pollution.
• Information about the quality of food products.

What is blockchain: how the system works

The main feature of the blockchain is the transparency of all operations, but without the appropriate access, individuals cannot make changes. The technology was developed from the Bitcoin cryptocurrency, which appeared as a self-regulating currency. It does not require maintenance by banking or other organizations and operates completely autonomously. Bitcoin used the blockchain to carry out financial transactions of any type. The blockchain wallet works on a similar principle as the Qiwi system. But to make it easier for you to understand, we will analyze everything using the example of DNA.

It has its own chain of blocks of financial transactions, and after confirming the transaction, a new block is created in the chain. Thus, each block, like a DNA cell, contains data about the entire network. The technology eliminates the possibility of adding a fake block or withdrawing the current one, because this will affect the entire system. It will not be possible to add to the structure what should be superfluous there. This excludes attempts of fraud and access by intruders.

The service is developing and not so long ago the first transaction was carried out, in which real currency was involved. It was possible to organize the preparation of a letter of credit in the amount of $1. An Israeli company and a UK bank, as well as an Irish company engaged in the manufacture of fermented milk products, took part in the deal. As a result, it was possible to significantly reduce the time required for the preparation and transmission of documentation. The whole thing took no more than 00 hours.

Blockchain application

At the time of its inception, the technology was used only for cryptocurrency, but a little later it was adopted by banking structures. Now it continues to actively develop and is being introduced into various areas of our lives. Blockchain-based business application platforms already exist that successfully enforce copyright enforcement, track manufacturing processes, and verify products meet specifications. And this is in addition to the main purpose - financial transactions.

Benefits of blockchain

Blockchain has the following advantages:

1. Reliability - 100% data safety is ensured, they cannot be deleted, copied or allowed to be used by unauthorized persons. Changes can only be made by the user who has access to it. Let's say if he decides to spend the coins that he has been deposited into the system.
2. There is no single body that would control the database. Each participant has equal rights.
3. The system has an unlimited nature, which means that any amount of data can be created, and besides, they will be stored for an unlimited period of time. Only the breakdown of each computer to which the blockchain is copied can lead to data loss, which is simply impossible.
4. Each company, project or cryptocurrency has its own blockchain that can be combined with other databases using special programs to interact with them.
5. It is almost free to store and manage data, while in many other areas where an advanced data system is used, there is a multi-level bureaucracy.

Blockchain is not bitcoin, but only a tool for creating cryptocurrency, but not only, its scope is very large. The most famous product created on the basis of this system is cryptocurrency and bitcoin in particular. But virtual funds are only one of the methods of using the blockchain, although the system has revealed its capabilities in this direction from the best side.

To date, not a single case of hacking or theft of bitcoins is known. Such a reputation provides good prospects for the development of blockchain in other areas of human activity, where it is important to ensure a high level of security for data storage or cash flow.

The prospects are how great that the system can be used in the future to organize transparent elections. The thing is that a data storage system protected from any hacking attempts is a way to ensure the objectivity of the results.

Why is blockchain the future?

Recently, new blockchain-based startups have been actively opening up. This is confirmed by statistics - over a billion investments over the past year have been involved in the development of projects. This is not only about the development of new cryptocurrencies, but also private and even public projects, which only contributes to the growth of the system's popularity. Developers see individuality and huge opportunities in it, realizing that it is possible to create a lot of interesting things, which has led to the active introduction of technology into a wide variety of aspects of human activity. So, banking systems, registries, social networks are currently being developed, even such giants as Microsoft have already paid attention to the system.

Blockchain is especially in demand in business and can be used wherever financial transactions are carried out and it is necessary to ensure trust between the parties in conditions where it is very difficult to achieve this. So, when concluding a deal, one cannot do without the involvement of a third party - one cannot completely trust his partner, therefore, they resort to the help of a bank, which becomes the guarantor of the operation.

Blockchain opens up the possibility to control operations and dispense with third parties, which makes cooperation easier and more profitable. The system is developing and more and more truly successful and, most importantly, promising projects are being created on its basis.

Now you are aware of what blockchain is and how it works, and being aware means you are armed. Liked the article? Then share it with your friends on social networks.

Best regards, Money Hunters.