Blockchain Technology – What It Is?

Blockchain Technology – What It Is And Who Needs It from Coding compiler. Blockchain is a public database of operations performed in the Bitcoin system. With its help, each user can find out how many Bitcoins were located at a specific address in a given period. Read more about what Blockchain technology is, read on.

The Purpose of Blockchain Technology

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 – the service / product. Using the system, you can check the authenticity of the documents, product, service or company.

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Blockchain Technology – What it is?

Blockchain is a kind of accounting database that stores information about real-life events. But at the same time, it differs from its analogues by a high level of openness and reliability. It can not be faked or removed, but all recorded events can be checked. Let us consider in more detail the essence of technology.

Blockchain is a method of recording all public data (transactions, agreements, contracts). Its peculiarity is that the information on all operations is not stored in one place, but scattered over thousands of computers. So any user can access the materials.

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All data are combined using mathematical algorithms in blocks, and the latter form a chain. Each block contains a previous hash. This chain starts from the first block in the system and is valid until the last. Editing information that has been online for a long time is impractical. It is necessary to rewrite all the blocks. The chain length is determined by the 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 can not be changed. You can only add new information.

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Blockchain Benefits

The distributed nature of the database makes it protected from hacker attacks and ensures the confidentiality of data. The information from the hash can not be copied. But even if the data at some stage will be changed, they will not match the digital signature. The system will immediately give an error.

Scope of Blockchain Application

Blockchain – anti-theft technology. If records of loans issued were recorded in the system, it would be possible to prevent the provision of loans on forged documents, mortgage fraud and car loans. In some countries, the question of introducing a system for this purpose is already being considered.

Today, Blockchain technology is used mainly in cryptocurrencies (bitcoin, litecoin, nxt). With these examples, the whole power of the system and its limitations became clear. In some countries, the system is used to fix the rights when purchasing works of art.

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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 Blockchain (technology of mobile payments and other financial flows).

13 organizations have already created a similar company DAM (ABN AMRO, BNP Paribas, JPMorgan, etc.). It also deals with the issue of introducing the platform into the financial industry. R3 is already conducting experiments on the exchange of bitcoins through a worldwide network, without the participation of third parties.

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In 2015, Goldman Sachs and IDG Capital Partners invested $ 50 million in startup Circle Internet Financial, aimed at using Blockchain to improve the quality of transfers in Bitcoins and dollars.

The 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 the database.

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The 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 the database.

The Estonian company Guartime, which is a forerunner in the digital processing of the country, has created a keyless signature-based Keyless Signature Infrastructure. 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.

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Where does this demand come from?

In the banking system, all transactions are monitored by one powerful device. The introduction of 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, reduce costs.

Open access to information is useful for the regulator. The state will be able to collect taxes more easily. If banks accelerate the transaction process and reduce costs, it will make the service more efficient and cheaper. International translation will be instant.

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Other projects

There are some more interesting startups using Blockchain:

To is a trading platform for securities;

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 – a system of accounting for diamonds.

This is not the whole list of startups using Blockchain technologies.

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Qiwi Introduces Blockchain

In the Qiwi system, information was previously transmitted centrally. This led to high loads and a large number of failures. Increase technical safety and reduce processing costs will allow the introduction of Blockchain.

The wallet of the Qiwi payment system contains “block chains”. In each subsequent link is embedded checksum previous. As a result, the blocks form a chain in which it is impossible to change or withdraw something.

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The next payment system into which Blockchain will be deployed is a WebMoney wallet. He plans that customers will be identified by the blockchain. This will allow new members of the system to verify their identity without visiting the office.

Sberbank is Introducing Blockchain

Russia’s largest bank intends to join the R3 consortium in order to integrate crypto-based services. This will increase the level of transaction security and reduce reliance on the SWIFT system in the future. Methods of protecting the database system virtually eliminate the possibility of spoofing records.

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At the same time, the database is characterized by a high level of distribution and openness of information. Sberbank plans to use the new system for transfers between subsidiaries and other banks. On the introduction of its own cryptocurrency are not talking.

In addition, the Central Bank has a negative position on all surrogate money. In theory, Blockchain technology can mitigate some of the political risk. When sanctions were only introduced, banks were afraid that they could be disconnected from SWIFT. The use of Blockchain increases the stability of operations, since the system does not have a single regulator.

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Hedges

The implementation of Blockchain interferes with the legal uncertainty of using the system. Venture investors view Russia as a supplier of managers and workers. According to opinion polls, only 1 out of 5 Russians know about the existence of Bitcoin. Of these, two thirds of the population consider cryptocurrency illegal. These problems are already being actively addressed in other countries.

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Cryptographic keys

Cryptographic keys are the foundation upon which Blockchain technology rests. What it is? The key is a very long number. For example, such: 1731695423709850868. It can only be decrypted 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.

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Network

Information about the blocks is stored on users’ computers. All of them are equal. Logging on to the network, the user connects to all other computers. It is important that this network is not tied to geography.

After receiving the data, the user checks them and, having made sure of the accuracy, saves them in the network and then passes them on. Participants are divided into groups: users creating new records, and miners creating blocks.

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Information on the network is distributed in the following way: “the user with the key B transfers 300 monetary units to the user with the key A”. The data is open, but at the same time encrypted. Knowing the key of the car, you can check whether it is in the pledge, but to find out the name of the owner will not work. Similarly, here.

Miners collect records, then they are checked and recorded in blocks distributed over the network. Regular users get access to these blocks in order to keep them at home, generate correct data and check other people.

While the record is not registered, it is considered unreliable. The participant can use it at your own risk. This entry can be canceled at any time if it is fake.

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Key Mining

A miner is a user creating 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. 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.

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The 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 rather simplistic, but it allows to transfer the principles of the system operation.

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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. It needs to be found. This miners and do. For their work, they get paid. The key generation procedure, on the one hand, complicates the work and, on the other hand, makes it almost impossible to attempt to form a fake block.

Conclusion

Within a few years, Blockchain technology will become the same everyday occurrence as the Internet. What does it mean? Ordinary services and goods can be obtained using the system: issue a passport, register a car, get a loan, buy tickets, etc. A person will only need to provide the key to the system to receive or check the service. This will improve the quality of life.

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