Blockchain Explained in Simple Terms
Getting the Blockchain Explained simply. The blockchain is a distributed database in which storage devices are not connected to a common server. This database stores an ever-growing list of ordered records called blocks. Each block contains a timestamp and a link to the previous block.
The use of encryption ensures that blockchain users can only change parts of the chain of blocks that they “”own””. “”Owning”” is understood in the sense that the users have the private keys, without which the writing of the files is impossible.
In addition, encryption guarantees the synchronization of copies of the distributed blockchain for all users. In the technology of the blockchain system, security was built up from the very beginning at the database level.
The blockchain concept was proposed in 2008 by Satoshi Nakamoto. It was implemented for the first time in 2009 as part of the digital currency Bitcoin, with the blockchain being the main register for all Bitcoin operations.
Thanks to blockchain technology, Bitcoin has become the first digital currency to solve the problem of duplication (as opposed to physical coins or tokens, electronic files can be duplicated), without the need for authoritative figures or centralized servers.
Blockchain Explained – Blockchain Security Explained
Blockchain technology security is provided by decentralized servers that include timestamps and peer-to-peer network connections. As a result, a database is formed that is managed autonomously, without a single centre.
This makes the blockchain very useful for registering events (for example, creating medical records) and data operations, identity management, and source authentication.
Blockchain Explained – How Does the Blockchain Work?
Blockchain technology is sometimes called the “”Internet of Value”” and many believe that this is a good metaphor. Anyone can post information on the internet and others can access it from anywhere in the world.
Blockchain blocks allow you to send arbitrary values anywhere in the world where a blockchain file is available. However, you must have a private key, which is created by the cryptographic algorithm, so you can only access the blocks that you “”own””.
By giving your private key to someone, you are essentially transferring the money that is stored in that specific section of the blockchain to that person.
Blockchain Explained – Bitcoin
In the case of Bitcoin, such keys are used to access addresses where currency amounts of direct financial value are stored. This is a function of the registration of money transfers and usually, this role is performed by banks.
In addition, another important function is realized: the establishment of trusting relationships and the authentication of identity, since nobody can change the blockchain without the corresponding keys.
Changes that have not been confirmed with these keys will be rejected. Of course, keys (such as physical currencies) can theoretically be stolen, but protecting multiple lines of computer code is usually not expensive nor difficult.
Compare, for example, the cost of storing gold reserves. This means that the basic functions of the banks – identity verification (to prevent fraud) and the subsequent registration of transactions (by which they become legal) – can be performed faster and more accurately through a chain of blocks.
Blockchain Explained – What is a Distributed Database?
Imagine a spreadsheet that has been duplicated thousands of times on a computer network. Imagine that this network is designed to update this spreadsheet on a regular basis. With this example, you’re already getting an idea of the blockchain. The information stored in the blockchain exists as a common and constantly verified database.
This way of using the network has obvious advantages. The blockchain as a database is not stored in a single location, which means that the records are really publicly stored and they can be easily verified.
There is no central version of this information that could be corrupted by a hacker. Copies are stored on millions of computers simultaneously and their data is available to anyone on the internet.
Blockchain Explained – What About the Reliability and Durability of the Blockchain?
Blockchain technology, like the internet, has built-in error stability. Blocking information is the same across the network. No one block can control the blockchain alone. There is not a single point of failure in term of getting blockchain explained.
Bitcoin was invented in 2008, and since then, Bitcoin’s blockchain works without any significant disruption. To date, Bitcoin’s problems are due to hacking third-party services built on the blockchain or caused by lack of control. In other words, these problems are due to bad intentions and human errors, not to bugs in the protocol architecture.
For almost 30 years, the internet has proven its reliability. This performance is a good omen for the blockchain technology that is evolving. As revolutionary as it may sound, blockchain is indeed a mechanism that ensures the highest levels of accounting and identification, for getting the blockchain explained.
There are no more missed transactions, human or machine errors, or even changes that are made without the consent of the parties involved, and most importantly, blockchain helps to ensure the legality of the transaction by recording it not only in the main register but also in a distributed system of registers connected via a secure verification mechanism.