Probably, everyone today has heard about the Blockchain technology, and while many experts know the topic comprehensively, there are still many people who do not have a clear idea of what it is. If you want to find out more about this invention, you will keep reading this article.
Initial Information about the Technology
Although the technology is pretty sophisticated, it does come with a straightforward name. Blockchain (a public database) is, in essence, a chain of blocks (digital pieces of information).
Such Blocks include the following three parts:
- Information about transactions, including the date and amount;
- Information about those participating in sales;
- Information is allowing distinguishing a block from the others. There is a hash, which is a unique code of each block.
A single block can store up to 1 MB of data, which depends on the size of the transactions. In simple words, one block can be used to store thousands of operations.
A History of the Invention
The history of the technology began from inventing a Merkle tree, which is the hash tree, discovered by Ralph Merkle in 1979. The main idea behind the blockchain technology was to ensure that nobody can change data in a P2P network of many computers.
In 1991, the tree model was used to design a ?chain of blocks,? a series of records, where each of which was connected to the previous one. The newest record would contain the whole history of the chain. This is how the blockchain was created. In 2008, a person or a group of people known as Satoshi Nakamoto (it is still unknown for sure who stands behind this invention) developed the distributed blockchain, which could be used for secured data exchange in the decentralized system.
How Does It Work?
So, how does the blockchain work? First of all, you should find out the main features of the technology, including the following:
- The Blockchain stores a record of all digital data exchanges known as a ?ledger.? Each digital data exchange is referred to as a ?transaction.? Once it is verified, it becomes a ?block? that goes to the ledger;
- It is based on a P2P network of nodes;
- Once a transaction is added to the system, it cannot be altered.
Thanks to cryptographic keys, people get a unique identity. A digital signature is created using both the Private Key (it gives you the right to sign and authorize different actions) and the Public Key (it is your wallet address that allows others to identify you).
It is important to note that it is crucial to store your private key properly because it gives everyone who has it access to your digital assets.
Each transaction must be signed for the authorization purpose. That transaction looks something like that ?Anna is sending Mark 0.3 BTC,? and it will include Mark’s wallet address, and will be signed by Anna’s private key and public key. Once the transaction is verified, it goes to the ledger with the data and time of execution as well as a unique ID number.
What Are the Main Benefits of the Blockchain?
The following are the main benefits that you can have if you use this technology:
- Better security;
- Increased speed and efficiency;
- Reduced costs;
Today, the number of users using this technology is continuously increasing for many reasons. It is a new, innovative approach to storing and exchanging data on different levels from private to government.