Foundation and benefits of Blockchain
What is blockchain? This is a phrase that is heavily typed on search engines when “Industry 4.0 Revolution” became a popular phrase in the newspaper. Join Lina Network to answer this question through a series of articles about Blockchain and its applications.
What is blockchain?
Many people still confuse Blockchain and Cryptocurrency together, so when the price of Bitcoin dropped from $ 20,000 to $ 5000, a lot of people were “allergic” to the term Blockchain. Blockchain is actually a technology, not a certain application.
We can compare Blockchain as the internet platform. Services such as websites, online games, electronic banking are all applications of the internet, in which electronic money in the banking system is the form used to pay online. Similar to Blockchain, they have applications such as Supply Chain, Review, Identity, Game, Cryptocurrency. And cryptocurrency application is one of those applications.
Blockchain concept from a technical perspective
Blockchain is a decentralized block chain storage technology with multiple servers (nodes), based on the consensus of the nodes. The data is stored in each block, a new block has a link to the previous block, forming a chain. This block chain has a firm link based on the cryptographic hash function.
Blockchain can be considered as a public ledger of all transactions that have been done on its platform (for example trading on SHA-256 platform of Bitcoin). The blocks are added to the Blockchain in a linear order (in a straight line), in a chronological order. Each full node (i.e, Each computer connected to the Blockchain network is used as the new server, performing the task of confirming and forwarding transactions) has a copy of the Blockchain, which is automatically downloaded when participating into the Blockchain network.
Simple description of Blockchain
If you still do not know what Blockchain is through technical concepts, we will give an illustrative example for you. Imagine, you are the chief accountant in a small company, all transactions arising during the period are recorded and saved on the secure drive C of the company computer. When you need to change any numbers such as money transfer, payment orders. You will update on this ledger and only you can see it unless you share it with a third person.
Blockchain is also the ledger, but this ledger is not stored on machine but it is stored on all machines in the company, including computers of unrelated departments such as security room and called the decentralized system – a distributed ledger system.
Decentralization of Blockchain
As mentioned above, Blockchain technology is a one-way information storage technology, not only on one server but many different servers (nodes) participating in the network. The blockchain has complete information about the addresses and balances from the genesis block – the original block to the most recent block completed.
Blockchain as a public ledger means you can query any block (e.g: https://blockchain.info/) for transactions related to a specific Bitcoin address – for example, you have Find your wallet address to see the transaction you received your first Bitcoin.
Blockchain is considered as the main technological improvement of Bitcoin, because it is an “untrustworthy” confirmation mechanism of all transactions on the network. Users can trust this worldwide public ledger system on different decentralized nodes, maintained by miners – bookers, in stark contrast to having to set up and maintain credibility with a trading partner (another person) or a third party intermediary (such as a bank).
Practical applications of blockchain
Blockchain is the structure for a new system of decentralized transactions based on untrustworthy confirmation, which is an important key of new opposition. Blockchain allows decentralized transactions of any kind between all parties on a global basis. Blockchain is a different layer of applications running on the existing Internet protocol stack, adding a whole new layer to the Internet, allowing economic transactions, including payments in cryptocurrency instantly and in the long run, with complex financial contracts.
Any currency, financial contract, or intangible asset or tangible asset, can be traded with a system like Blockchain. Moreover, Blockchain can be used not only for transactions, but also a system of registration and inventory to record, track, monitor and transact all assets.
A Blockchain is relatively like a giant spreadsheet to register all assets, and an accounting system to trade them on a global scale, can include all forms of assets held by all parties around the world. Therefore, Blockchain can be used for any form of property registration, inventory and transactions, including all financial, economic, and money fields; tangible assets (physical assets); and intangible assets (voting, ideas, reputation, intent, health data, …).
Let’s learn about the mechanism that makes Blockchain the most transparent and secure technology nowaday through the article: Blockchain Consensus Mechanism.