Blockchain Guide For Beginners
What is Blockchain Technology?
Blockchain is a distributed database that records history orders and actions invented in 2008. Each block contains a link to the previous block. The most important aspect of Blockchain technology is its resistability to data altering. Once recorded - actions and orders cannot be changed retroactively making the infrastructure secure-by-design. While in this article we'll examine the use of Blockchain technology in Bitcoin and other Cryptocurrencies, the appliance of the Blockchain design is suitable also for other fields - transaction management, medical records management etc.
The Distributed Database
Let's examine the following example: a text document is duplicated hundreds of thousands times all across a network of computers. Every change in a single instance of this document, should be reflected in all duplicated copies of it. Now, when a user needs to perform a change - this change isn't stored on a single computer in the network, but it is stored on millions of computers within the network simultaneously. There is no centralization of data - meaning that if one of the computers in the network becomes inaccessible, the changes to this text document would be restored using one (or more) of the copies that exist across the network.
Due to its decentralized nature - Blockchain technology is protected against any flaw that appears in any single node within the network. This means that if a single (or multiple) nodes are disconnected from the network, the orders history can be recovered from many other nodes. Implementing this secure-by-design mechanism, makes the blockchain resistant. During the time passed from 2008 (when Blockchain was introduced), the design of it (as applied in Bitcoin and other cryptocurrencies) has not been significantly changed. Minor changes were implemented in blockchain implementation, making it even more resistant to hackers trying to twist this mechanism for their own benefits.
Most of the security advantages of the Blockchain technology come from its decentralized nature. Even if a single node in the network is hacked - the hacked data can be verified against many other nodes in the network - making it almost impossible to be altered. Another security mechanism that is used by the Blockchain is private and public keys. When you purchase a Bitcoin, a private key and a public key are generated. The public key is stored inside the blockchain - while the corresponding private key is given to the purchasing person - and should be stored on a separate (private) location. The ownership on the purchased Bitcoin is given solely to the owner of the private key. This makes it almost impossible for hackers to claim ownership on a bitcoin.
The Road To Web 3.0
Besides the appliances in the Cryptocurrencies market, the Blockchain technology lays the most important infrastructure that can be used in several other technologies such as:
- Smart Contract - Code execution upon the triggering of certain events. Ethereum is a new cryptocurrency technology that implements this behavior.
- Governance - Being transparent by nature, the Blockchain technology can be used to enable online elections that are securely administered.
- Distributed File Storage - Due to the peer-to-peer nature of the Blockchain, it can be used to store files on the network, making it resistant to hacking an altering.
- Identity Management - Storing identities on the network itself, encrypted with a private key. Makes hacking nearly impossible.