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It seems that the entire world is obsessed with the blockchain. If you still struggle with the understanding of what is the blockchain, and what are the blockchain technologies, read this brief article for the beginners who want to get the basic knowledge on this subject.
The simplest blockchain technology definition states that it is a chain consisting of blocks. These chains contain all kinds of information and data. But in 1991, a group of researchers created this system for another purpose. Actually, they intended to develop an electronic timestamp for documents, lest anyone should forge them. However, it wasn't popular among people until the turning point in 2009.
In 2009 a man, whose name is still unknown, (but he calls himself Satoshi Nakamoto) decided to use blockchain for a new type of cryptocurrency called Bitcoin. From that moment blockchain and bitcoin blended and created the blockchain BTC. Nowadays this system of blockchain technology bitcoin is used as a basis of any cryptocurrency, representing one of the safest systems in the world.
The basis of the blockchain technology is the combination of thousands of blocks. The three parts of any block include data, hash and the previous block’s hash.
Hash is needed to secure the content. It is a unique number, which identifies all the single blocks and their data. It is like a fingerprint, because it is unique and never duplicates or occurs again. As soon as the block is created, it automatically gets its hash. If anybody cracks or changes the block content, the number immediately alters depending on the content of the block. With changed content, the block is not the same anymore, so it requires a new hash.
In addition to this, all the blocks in the blockchain system include the previous block’s hash to ensure consistency. For this reason, the blocks depend on each other and create chains. These chain connections enabled the creator of the blockchain technology to develop Bitcoin and to guarantee its safety and reliability.
As you can see, the main advantages of the bitcoin technology blockchain system are closely related to its security and high speed. However, it is not perfect at all, having its own flaws and weaknesses. Thus, it is far from obvious whether the digital money will ever take the first prize in the competition with paper money, but we must be well-prepared and know the weak sides of the system.
Even though blockchain technology and bitcoin have many advantages, there are some serious issues to consider as well. They concern the scalability and anonymity of the system:
Let’s recap the major points about blockchain:
Now you know the meaning of the blockchain technology, its advantages and disadvantages, and in what fields it can be useful.
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