What is Blockchain?

By February 28, 2019 13:26
What is Blockchain - Coinconomist

“Now we have witnessed how, in practice, one Internet user can transfer digital property to another user, and to do it as safely as possible and they both will know about its authenticity and legality. It is difficult to overestimate the importance of such opportunities. ”

At first glance, the blockchain does not look exactly like the things we are used to.

With the help of the blockchain, many people can make entries in blocks of information, and the user community can control their authenticity and keep track of all changes and updates.

If we consider the blockchain in more details, it becomes clearer what makes this technology so unique and revolutionary.

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First, let’s look at how Wikipedia works, because in fact, it is an information resource in which users can also add and edit information and this is its similarity to Blockchain.

Like the blockchain, Wikipedia works on the Internet and uses the client-server work model. The user, with certain permissions on his account, can modify the records in Wikipedia, which are stored on a central server.

Every time when user visits a Wikipedia page, he is always presented with the latest master copy of the record. Control over the database remains with Wikipedia administrators, allowing them to maintain control over access and permissions.

Wikipedia’s digital skeleton is similar to highly secure and centralized databases that governments, banks or insurance companies use today. Control over centralized databases belongs to their owners, including update management, access and protection against cyber threats. A distributed database created by using blockchain technology has a fundamentally different digital basis.

The “master copy” of Wikipedia is edited on the server, and all users see only the latest version of it. In the case of the blockchain, each node in the network, during the test, comes to a certain result, each of which updates the record independently, with the most popular record becoming the actual official record.

It is this distinction that makes the blockchain technology so useful – it represents an innovation in the registration and dissemination of information that eliminates the need for a trusted party to facilitate digital relationships.

However, the blockchain technology, for all its merits, is not a new technology. Most likely – this is a combination of proven technologies used in new ways. It was the special combination of the three technologies (Internet, cryptography with a private key and the protocol that controls the stimulation) that made the idea of ​​the creator of Bitcoin Satoshi Nakamoto so useful.

As a result, a system for digital interactions was created that does not need a trusted third party. Work on the protection of digital relations is provided by the elegant, simple but reliable network architecture of the blockchain technology itself.

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Definition of digital trust

Trust is an assessment of risk between different parties, and in the digital world, the definition of trust often comes down to identity verification (authentication) and permission verification (authorization).

Simply put, we want to know: “Are you who you say you are?” and “Can you do what you are trying to do?”

In the case of blockchain technology, cryptography with a private key provides a powerful possession tool that meets authentication requirements. Owning a private key is proprietary. It also saves a person from having to share a large amount of personal information that is needed for sharing, leaving him unprotected from hackers.

Authentication alone is not enough. For authorization — having enough money, broadcasting the right type of transaction, and so on — a distributed peer-to-peer network is required as a starting point. Distributed network reduces the risk of centralized damage or failure.

This distributed network should also focus on record keeping and transaction network security. Transaction authorization is the result of the fact that the entire network applies the rules on which it was developed (blockchain protocol).

Authentication and authorization provided in this way allow you to interact in the digital world without relying on trust. Today, entrepreneurs in industries around the world have realized the consequences of this development — unimaginable, new and powerful digital relationships have now become possible. Blockchain technology is often described as the basis of the transaction level for the Internet, the basis of Internet values.

In fact, users are haunted by the idea that cryptographic keys and account books can stimulate the protection and formalization of digital relations. Everyone, from governments to IT firms and banks, seeks to create this transaction level.

Authentication and authorization, which are so necessary for digital transactions, are created as a result of the configuration of the blockchain technology.

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By February 28, 2019 13:26