What is a blockchain

What is a blockchain
20 January 2022     4965

What is a blockchain

We have already discussed topics such as: NFT & NFT Markets, DeFi, ERC20, etc. And in this blog - we want to focus on the more fundamental parts.

Characteristics of blockchain

Bitcoin is a network that works on a protocol, and the name of this protocol is blockchain. Basically Bitcoin itself and blockchain have been synonymously perceived for some time.

However after a short time the blockchain developed and formed into a separate concept; The result is thousands of new blockchains built on similar cryptographic techniques. When people use this word today they either refer to the concept of blockchain in general or refer to any particular blockchain, for example, the one on which Etherium works.

According to David Floyds analysis, the basics of blockchain technology are fairly straightforward. Any blockchain consists of a single chain of split information, chronologically sorted. In principle, this information may also be a chain of units and zeros, which means that it may contain emails, contracts, marriage certificates, stock exchange information, and so on. This means that a transaction between two parties (if the terms are agreed) may be such that a third party is not needed at all. This is exactly what cryptocurrency stakeholders see in this potential, as it enables them to exchange services and funds at will without the need for unnecessary interference. Which is natural is sometimes necessary. This is where the great potential as well as the great risk come into play.

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While Boitcoins goal is to serve as both a value-saving system and a payment system, this does not mean that it has no other additional uses. The main goal of the Etherium project is to maintain a platform where smart contracts operate; Consequently this platform is a world of decentralized financial products where neither third parties nor additional taxes or potential information problems are often featured.

These components have also attracted the attention of governments (as well as companies) in different countries; The most important aspect for them in the entire crypto-world should be considered blockchain technology.

In the case of Bitcoin, the information on the blockchain is simply about exchanges. This is a kind of list. The X person transferred the coins to the Y person who transferred the Z and so on. As a result of such records, everyone has an idea of ​​the situation. It is also important to note that these exchanges do not need to take place between people.

Anyone and everything can have access to the Bitcoin network regardless of any feature or feature (which does not involve connection itself). This in itself creates a lot of new opportunities.

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Is blockchain safe

Blockchain technology manages to achieve decentralized security in several ways. First the new blocks are always stored consistently and chronologically, i.e. they are always added to the blockchain at the bottom. Once a block is added it is very difficult to change its information if most of the network users do not reach a consensus on this topic. This is because each block contains its own hash, which is related to the hash of the previous block as well as time data. Hash codes are tools created by a mathematical function that convert digital information into a string of numbers and letters. If this information somehow changes the hash code will also change automatically.

Danger of hackers

If, say, a hacker wants to activate a node on a blockchain and steal cryptocurrencies from others, that change will affect the entire blockchain. Other users will be able to verify this information and compare the hacker blockchain to the rest.

For such a hacker to be successful he would have to simultaneously control 51% (or similarly large percentage) of the blockchain in order to be able to convince the rest that his copy is legitimate. Such an attack requires a lot of time and resources as it will replace a myriad of blocks as well as time data.

Fixing the mentioned change is still a great chance that people would not miss it, there is no doubt that they will do a "hard fork" with a similar version. Which ends with the fact that the cost of the new version will drop significantly and will no longer be useful to hackers. Bitcoin is specifically designed to give individuals more motivation to engage with the network than to steal money (although financial manipulation is still common).

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Information protection

Another name for blockchain is "distributed ledger" (or distributed account), which highlights the difference between such technology and a well-preserved Word document. Bitcoin blockchain is distributed, ie anyone can download it, it is public. However this becomes a bit problematic when it comes to blockchain updates as there is no central authority to monitor various exchanges. That is why the participants themselves create blocks of exchange data.

For example, user 112HJG2H233UI4HHJHR334 sent 0.0021637 Coins to user 1276WYEDG3ED3737788 on November 11, from 12:00 to 12:10. This combination of letters and numbers is a substitute for addresses. If you are from security or you are just very informed you can find out who is behind this cipher. It is a common misconception that the Bitcoin network is anonymous, although some exchanges and pre-preparation make it all the more difficult for them.