What is Blockchain? Talking clearly about the complicated. | Business Biceps

What is Blockchain? Talking clearly about the complicated.

By Vera Cryptocurrencies, ICO, For newbies No Comments on What is Blockchain? Talking clearly about the complicated.

Blockchain incredibly popular these days, but what blockchain? How does it work, what problems are solved and how it can be used? Below we answer these questions simple and understandable language. If you still have questions, do not hesitate to write them in the comments, happy to answer.

As the name suggests, it is a chain Blockchain containing information blocks. This technology was first described in 1991 by a group of scientists, and was intended for the storage of digital documents without the possibility of forgery, editing, creating an afterthought, etc. However, much of the technology has not been used, as long as Satoshi Nakamoto, in 2009, it is not adapted to their offspring, cryptocurrency Bitcoin. Blockchain is fully open decentralized global code. He has one feature: one recorded in blockchain information can not be changed or deleted.

How does it work?

Let’s consider in more detail the block. Each block contains certain information, personal and original HASH HASH previous block. Data stored in the block depends on the purpose blockchain. For example, blockchain Bitcoin contains information about the sender, the recipient and the number of coins that have been listed.

Thus, each block contains the private hash. You can compare the hash fingerprint, it identifies the unit and all of its contents, which is always unique. Changes within the block and entail changing its hash. In case if the hash block has changed, then it is a completely new, different unit. The third element within each block – a HASH preceding block. Thus effectively formed chain blocks. This development makes Blockchain safe. Let’s look at an example.

We have a chain of three blocks as you see in the image, each block has its HASH and hash of the previous block. Unit 3 points to the block 2, unit 2 indicates the block 1. The first block is special, it can not point to the previous block, because it is the very first, this unit is called – the genesis block.

Now suppose that we want to fake (falsified) unit 2, it will change the hash of this block, which will make the block 3 and block following it wrong, because they no longer contain the correct HASH previous block. Thus, a change in one unit will do the following blocks invalidated for them.

But the use of hash enough to prevent fake blocks. Computers today are very powerful and can count thousands of hashes per second. We can falsify the block and counted all subsequent hashes to make blockchain again valid.

To avoid this, blockchain has in its arsenal of weapons, called Proof of Work. This is the mechanism that slows down the creation of new units. In the case of Bitcoin need about 10 minutes to calculate the new block and add it to the chain. Proof of Work makes it difficult to block the possibility of falsification, because forging a single unit, you need to count all subsequent blocks through the Proof of Work. Creative use of this mechanism and hashes is the foundation of security in blockchain.

But there is another way in which blockchain protects itself, and this decentralization. Instead of using a centralized facility for managing the entire chain blockchain uses P2P network. Where absolutely anyone can join the network. When someone connects to the network, it receives a complete copy of blockchain. The host can use this to verify the validity of the blockchain.

I propose to consider what happens when someone creates a new block. This new unit will go to all nodes connected to the network. Each node checks the block to verify that the unit has not been tampered with (check it HASH). If everything is in order, each node adds a new block in your copy blockchain. All nodes in the network reach consensus, they agree which blocks are valid and which are not. Counterfeit blocks are rejected other nodes blockchain network.

Thus, in order to successfully falsify the chain of blocks in blockchain, we need all changed blocks and following them in the chain to pass mechanism Proof of Work, as well as to have access to more than 50% P2P nodes in the network. Only then will our forged block is adopted. But it is almost impossible!

Blockchain technology is constantly evolving, one of the most important developments – a smart contracts. We have already written a detailed article on this subject, I recommend to read (See article What is a smart contract “).This technology has attracted a lot of attention and has huge potential.

So now you know what blockchain, how it works and what problems it solves. Subscribe to our social networks (links in the footer of the site), so as not to miss the information about new articles and projects.

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