Blockchain - what is it?

Blockchain refers to a continuous chain of blocks through which information about all user actions is synchronized and updated in the financial ecosystem. Another name for blockchain is distributed ledger technology.

For the first time, users of the cryptocurrency financial system Bitcoin became familiar with the blockchain concept. It was here that it was first introduced. This concept arose on the basis that all data along the chain of transactions is stored on the computers of independent users. But if one user’s equipment breaks down and the information disappears, it remains unchanged to other users on other devices.

Features of the blockchain structure

Technically, blockchain is an advanced database system. The main mechanism is based on the open exchange of information within the same network. The blockchain base is blocks that are added to the network sequentially. The fundamentally significant difference in the design is that you can add data, but changing the previous information in the chain is impossible.

It is also essential to ensure reliable protection against unauthorized entry of transactions, ensuring the consistency of the entire system.

Application of blockchain system

For the first time, this mechanism was introduced precisely in the cryptocurrency sphere with the launch of the Bitcoin financial system. However, today, due to the assessment of all the advantages, the blockchain mechanism is already successfully used in other industries:

  • energy;
  • other financial systems of cryptocurrencies;
  • the field of multimedia and entertainment;
  • retail.

With a high degree of probability, such a system will be used in other directions in the future.

Key features and benefits of blockchains

The main advantages of using this technology are as follows:

The principle of complete decentralization of all processes. The interaction of all system participants is ensured without intermediaries who perform a controlling function since the need for this when using blockchains disappears. Due to the transparency and openness of all processes, the trust threshold of participants in each other is leveled.

The principle of immutability. No participant in the system who has access to the database has the technical ability to change previous data on the blockchain. Also, no one can interfere with the transaction process after it is entered into the register. Even if errors are identified in the record, a new transaction must be added to correct it. And data about both transactions will be saved.

In addition, the blockchain system provides the ability to quickly audit all transactions and a high level of data confidentiality and reliability without the involvement of third-party control.

Elements of blockchain technology

Blockchain architecture includes several elements:

  • distributed registry - a database that displays general information about the network; it stores copies of all transactions;
  • smart contracts are special programs in blockchain systems that are automatically launched to conduct transactions subject to specific rules and conditions;
  • public key cryptography is a security system through which a system participant is accurately identified; 2 keys are simultaneously generated during a transaction (a public key with open access for all network participants and a unique key available only to a specific user).

Based on such processes, the highest level of reliability in the use of digital coins or other assets, the use of which has already been established on the blockchain system, is ensured.