New world brings new technologies every day. The Internet was invented over 30 years ago and it still continues to develop. Even now while you are reading this article, someone has already written a code that will change the tomorrow look of the websites. However, blockchain is rather “young” invention and not many people can say how blockchain works. There are a lot of different technical explanations that can be understood only by a small group of people. Well, actually to use blockchain you don’t have to understand how it works but being aware of this information you will understand why it’s considered revolutionary.
Let’s leave all those scientific terms and look at blockchain itself. It is a group of nodes – computers are connected to the blockchain network – which store and update information. To work properly and be connected, they use special program – client – which allows them to exchange data and update it. Therefore, everything is transparent and decentralized. Still, don’t understand how does blockchain technology work? We have a good analogy for you.
How do you usually “discuss” the terms of the contract? You write it in MS Word, send to other parties, wait until they check it and make their offer. While your potential partners have the document, you can’t change anything in your version. It’s blocked. Only after receiving the copy with their remarks, you can offer something new. It is a real waste of time, isn’t it? Nevertheless, you can also use Google Documents. In this case, both sides have access to the contract, can correct it and the other parties will see the changes immediately. This is the most simplified image of the blockchain technology. Read more about it here.
How Blockchain Technology Works: Some Interesting Things to Know
You already use the blockchain technology even if you don’t know about it. Some other good examples are TOR and VPN Network. The main principles of this network are similar to a blockchain technology. There are three main things you should know about blockchain:
- it is safe and cannot be corrupted;
- it is completely decentralized;
- it is the best way to protect and store transaction information.
While banks and big corporations are keeping their data on one huge server, the blockchain shares the ledger through the whole network and sent the new data every ten minutes so every node can update the ledger. This means that everything is saved in the whole network, not in one place. So, if any person decides to ruin the network it won’t happen. Well, in theory it is possible, but can’t be done in practice.
Who will use this technology?
Everybody knows: everything that has got into the Internet will remain there forever. We also have a big problem with keeping our data safe, because we’re stuck in the “login/password” system, which can be hacked even by an ordinary student. Blockchain security methods use encryption technology. It means that the encrypted data is sent through the network and you’ll need a special key to decrypt it. It is especially important for financial transactions. To know more about it read this article.
Therefore, everyone who wants to protect his own money and transaction may become the main user of this technology. Remember, the data is shared between all the nodes in the network, so the information about transaction will be stored in each of them and can’t be lost. However, the information is also encrypted so the third parties can’t reach it without the key. Moreover, this is where Bitcoin and other digital or cryptocurrency shows up.
At first sight, Bitcoin is like any other currency. Nevertheless, it has no physical form or intrinsic value. You can use it in network only and it is a good way to determine the price of goods and services. You’ll need a wallet to pay and store Bitcoins or any other cryptocurrency. But remember, the blockchain is decentralized and there is no service support where you can call or write if you’ve lost the password or your key.
The blockchain has a huge potential, which is already used by smart startupers. In the future, it will definitely bring a lot of changes in economic and social life all over the world. Look at Uber and AirBnB – changes are already happening.