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Everyday your hear about Blockchain technology, Bitcoin, ICO, Ethereum but do you understand what blockchain, cryptocurrency and Smart Contracts are? How does it all work? How can blockchain be used in business? How will blockchain change the world? This article is aimed to answer all these questions.
The Blockchain is a technology based on the virtual digitized decentralized network with “blocks” of information. When you add any information in the network (e. g. transaction), you add it in all computers in the network. But if another user in this network adds his information and make a new block after yours, you can’t modify your block. However, you can edit your block if you make it editing from all computers in the network and make similar changes in one moment only. It makes Blockchain one of the best technology for saving and structure information.
“Blockchain technology distributed across multiple data centers can ensure security against attacks on important network and hardware equipment.”
Nowadays popularity of this technology in different spheres growing up at a great pace. And it’s all about Blockchain advantages:
One of the reasons why your business should use this technology is about its open source structure. It means that other users of the network can read and confirm (or unconfirm) the information. The essential thing of being open source is that it can’t save logged data without majority Blockchian network users.
Next prime blockchain reason is lack of a central data hub. Instead of running a massive data center you save your information in decentralized net, where any user can read, check and (un)autorizate any of your actions.
3. Faster transaction settlements
Blockchain technology works 24 hours a day, seven days a week, which means blockchain-based transaction process is quicker.
When you send transaction to traditional banks, it’s a common thing for transactions to take days to be completely settled. This is due to protocols in bank transferring software, as well as the fact that financial institutions are only open during working/business hours, five days a week. You also have financial institutions located in various timezones all around the world, which delays processing times, but it`s not about blockchain.
4. User-controlled networks
This advantage is rather a consequence of the decentralization of the network. Instead of holding a third party for data processing, stakeholders decided to control each other and decide what to do next. For example, the inability to achieve 80% consensus on the update, tied to the bitcoin block, lies in the fact that more than four months ago it was necessary to develop a plug into two separate currencies (bitcoin and bitcoin in cash).
5. Reduced transaction costs
As you remember, blockchain allows you to execute transactions without the need for a third party, which is often a bank or a central server. Since the intermediary is absent, then you do not need to keep it, which allows you to get rid of impressive expense items.
How can we be sure that the last blockchain element stays intact, and is never tampered with?
When a blockchain block is created and filled with information, miners will put it through the process. They take the information in the block and apply a mathematical formula, turning it into something else, a hash. Hash is short and consists of letters and numbers in the first eye with random consistency. Hash will be stored with the block, at the end of the chain, any next hash contains all previous hashes.
Hashes have some properties. It’s easy to produce a hash from a collection of data like a bitcoin block, but it’s practically impossible to work out what the data was just by looking at the hash. And while it is very easy to produce a hash from a large amount of data, each hash is unique. If you change just one sign in a bitcoin block, its hash will change completely.
Miners don’t just use the transactions in a block to generate a hash. Some other data pieces are used as well. One of these data pieces is the hash of the last block stored in the blockchain.
How to use blockchain in different spheres
Healthcare: The use of digital signatures based on blockchain data, which allows access only with the permission of several people and full compliance with keys, will allow to regulate the availability and maintain the confidentiality of medical records. People related to health sphere will create their own network, which will increase according to numbers of new patients, insurance companies, doctors and medical staff and will reduce chances of fraud during medical services payments.
Protection: Unauthorized access or modification of critical infrastructures, such as operating systems and network firmware, can seriously damage not only the security of a particular user but also undermine national security with a larger attack scale. In most countries, defense equipment is managed both at the side of deployment of this equipment and from large control centers, which threaten a great danger in terms of massive centralized attack on one of these centers. The Blockchain technology will create an impregnable network with impossibility to get management access from the outside.
Government: Many government agencies continue to process 70% of the information in paper form, including information about citizens from unauthorized hacking. The consequences of this method are slow work of agencies and corruption. The Blockchain technology can improve transparency, speed up work and check corruption in governments all around the world.
Law: It is worth to return to the beginning and mention such thing as a smart contract. A smart contract is a computer protocol intended to digitally facilitate, verify or enforce the negotiation or performance of a contract. Smart contracts allow to have the performance of credible transactions without third parties. This simple piece of code will help you save your money on the transaction as it is written into a data block which can not be changed. It will deprive you of the need to perform any digital actions yourself when certain conditions are met.
Energy: Probably one of the most popular use of Blockchain technology in the modern world. The fact is that energy is quite expensive and not enough, but it can be saved by obtaining energy from renewable sources (solar, wind, etc). Someone produces less than he needs and someone more than he actually needs. People began to create micro networks for the exchange and storage of the energy. But what does Blockchain have to do with it? The answer is quite simple, in order to maximize the rational use of the generated energy, they began to use Blockchain technology to see how much energy was consumed, at what hours, etc.
To sum up, there are lots of opportunities with Blockchain technology and its immeasurable potential for improving the quality of service provision improving the confidentiality and integrity of data at the same time. Transparent transactions, full accounting of data are just first steps towards a better digital and sustainable world.
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