What is blockchain?

By: Finance Guider Team

What is blockchain technology?

In layman’s terms, Blockchain is a technology that is about the distributed storage of information without the ability to change it. Blockchain technology was invented a long time ago, around 1970, but its first practical application was in the Bitcoin network. Based on the name “Blockchain”, we can understand that this technology involves the storage of information in a chain of blocks (Block means block, Chain means chain). This information is constantly being added to, and it is impossible to remove it from there. The information in the blockchain is distributed between the computers connected to the network, which are called “nodes”. The more information in the blockchain becomes, the more participants there must be in the network.

Features of Blockchain

The main features of blockchain are its openness and anonymity at the same time. All transactions in the network are absolutely open, so anyone can see the entire history of transactions, but information about the sender and the recipient is private. Each participant accesses the blockchain using special keys that are completely unique. A blockchain key is a special set of cryptographic records that can only be broken by accessing most of the computers connected to the network.

Implementation of blockchain technology in various fields

Thanks to its versatility and the ability to encrypt data, blockchain technology has the potential to be used in a large number of areas. Not for nothing, IBM is urging the U.S. government to use it in government processes and thereby save not only money but also time. Below, we will present to you in which areas and how the blockchain technology can be used.

Blockchain technology in cryptocurrencies

For cryptocurrencies, blockchain technology guarantees the fixation of information about all transactions made by users of a particular cryptocurrency. To make it clearer, let’s take an example. You have a photo that you can send to your friends, acquaintances, parents, etc. In that case, you keep the original and you send copies, and blockchain technology was invented to prevent this from happening to money. Blockchain can be compared to a public ledger, in which all transactions, transfers and other financial transactions are recorded, and anyone can check and verify their authenticity. When it comes to banks, all information about transactions is stored on their servers. This means that banks can hide this information and use our money for their own purposes. And we won’t even know about it.

The main reason to trust the bank is the license of the central bank, which, ironically, we also have to trust. Herman Gref, has said that blockchain technology, over time, could wipe out more banks. And he advises companies that want to stay competitive in the future to use blockchain in their work. So at the moment, the world’s leading banks are hunting for specialists in blockchain technology and are even creating their own cryptocurrencies. The interesting thing is that blockchain technology is not only applicable to finance.

Blockchain technology in politics

Take voting, for example. Like a presidential election. Yeah, of course not all presidents will want to use blockchain technology. We think you know who we mean. But if you put blockchain into the election process, everyone can vote honestly for their candidate. Since information in blockchain cannot be changed, fraud will not be possible.

Blockchain technology in medicine

If we talk about blockchain in medicine, it will be possible to record all medical history, tests, information about vaccinations, and it will not go anywhere. In addition, it will be immune to forgeries and alterations, in medical terms. All mistakes made by doctors will also be recorded in the blockchain, which will be a motivator for them to do a good job.

Blockchain technology in logistics

If blockchain is implemented in logistics, a large number of intermediaries will simply be left out. If you take any product from production, people will know where it was produced, how long it was transported, how long it was in the warehouse, when it went through customs – this will greatly reduce the cost of the product.

Advantages and disadvantages of blockchain technology

The advantages of blockchain technology include its decentralization, transparency, reliability and versatility. We have already written enough about the advantages, so in this section, we will focus on its disadvantages. At this time, one of the main problems of blockchain technology (in the cryptocurrency Bitcoin), is the problem with its scalability. But, this problem can already be considered solved, because there are projects that have very “light” blockchain, which is able to pass a large number of transactions.

Although, Bitcoin, as the first and most capitalized cryptocurrency, still needs improvement. Another disadvantage of blockchain, is the inability to undo a transaction. Thus, we have a problem with erroneous or fraudulent transactions. This means that if your account was hacked and money was sent, you can’t get it back in any way.

Conclusion

As you can see, there are a lot of applications for blockchain technology, but the most important is the application of blockchain in the budget of the states, if it can be done, then the corruption will be defeated once and for all. We hope you understand what blockchain technology is and what prospects it brings. And now, when this or that politician will speak negatively about cryptocurrencies and blockchain technology, you just think once more if he is not involved in some “business”. At the moment, blockchain technology is one of the most promising developments in the world. It can revolutionize and automate a large number of activities. That is why global technological giants such as IBM, Microsoft and others are studying it. Due to the complexity of the technology itself, most people find it difficult to understand what blockchain is, but we will try to convey the information to you in simple words.

Blockchain technology is a technology created in the 70s of the 20th century, which was widely used only in 2008, when it was the basis for the development of the Bitcoin cryptocurrency. The essence of blockchain technology is the decentralized storage of information located in a chain of blocks. This technology is needed to prevent hacking, which aims to steal information from the central servers of companies. To get hold of the information contained in a blockchain an attacker needs access to most of the computers or servers where the information he needs is distributed. In this article you will read enough information to understand how this technology works.

At the end I would like to tell you that in the next 5-10 years everything is going to change in the world, from technology to currencies. So if you want to get on the train, which is just gaining its momentum, Finance Guider will help you keep up to date with the latest news related to blockchain technology and cryptocurrencies.

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