What is blockade in simple words
Blockchain is the foundation of the basics of crypto currency and the term with which 90% of Internet users have already crossed. You 100% have already heard it somewhere. In this material, we will explain in simple and understandable terms the term that has already begun to change our lives.
Such attention to him is due to the revolutionary character that he introduced. In this guide we will open the essence and concept of block-books in clear language, its role in the world of crypto-currency, let’s talk about the application in other spheres of life. If you want, this is a kind of instruction for teapots.
Description of the term
The very term Blockchain partially characterizes its tasks and purpose. Part “Block” is a block, “chain” is a “chain”. It turns out that Blockchain is a chain of blocks. And not just a chain. It adheres to a strict sequence.
What are these blocks and what is the chain? Blocks are data about transactions, transactions and contracts within the system, presented in a cryptographic form. Initially, the blockade was (and still is) the basis of Bitcoin’s crypto currency . All blocks are lined up, that is, connected. To record a new block, you need to consistently read information about the old blocks.
All the data in the blockroom are accumulated and form a constantly updated database. From this database, nothing can be removed or replaced / replaced. And it is “limitless” – there can be written an infinite number of transactions. This is one of the main features of the block.
The work of blockbuster can be compared with Torrent. The functioning of torrents occurs in the P2P mode (peer to peer – a computer network where all participants are equal). When we download a file from the tracker, we do not use a central server or storage. The file is directly downloaded from the same torrent peer as you. If there are no participants in the peer-to-peer network, you will not be able to download files either. Similarly, in the blockade. All transactions are conducted between entities directly. And they are implemented due to the fact that all participants are connected to the same network – Blockchain.
This technology was created with the advent of Bitcoin crypto currency . It happened in 2009 year. The public person-creator of the new virtual currency and Blockchain is Satoshi Nakamoto. However, this person is mythologized in the world of crypto-currencies. This is a pseudonym, behind which stands one or several people who decided not to disclose their identity. Obviously, they spent thousands of hours building blocks of furniture.
There are two kinds of chains:
- Public Blockchain is an open, complementary database. This type of block is used in the Bitcoin crypto currency. Each participant can record and read data.
- Private or private blockers have restrictions on writing / reading data. Priority nodes can be set. The subspecies of Private Blockchain is an exclusive blockbuster. In such a chain, a group of people involved in the processing of transactions is established.
Summing up the subtotals, we list the key features of Blockchain:
- Decentralization – there is no server in the chain. Every participant is a server. He supports the work of the whole detachment;
- Transparency – information about transactions, contracts, and so on is kept publicly available. However, these data can not be changed;
- Theoretical unboundedness – theoretically the block can be supplemented with entries to infinity. Therefore, it is often compared to a supercomputer;
- Reliability – to conserve new data requires consensus of the nodes of the block. This allows you to filter operations and record only legitimate transactions. Implementing a hash substitution is unrealistic. This feature of the blockade is described in the picture below.
How the blockade works: technical details and nuances
Partially the principle of Blockchain’s work we described above on the example of a monetary transaction. Before considering individual technical details, let us dwell on the design of this entire system. This sequence of blocks is a chain, not a vicious circle or something else. Each of the blocks contains an array of specific data. And all the blocks are connected. That is, a new “array” can be created only after the old array is closed.
We came to the main technical point – the formation and closing of blocks. As can be seen from the figure above, each link in the chain contains a specific key. Until it is decrypted, the block (link) will not close. How does this decryption happen? Mining is responsible for this in the crypto currency. Miners engaged in the production of crypto currency, do this with the help of graphics cards and processors. Those in turn perform computational operations, the main purpose of which is the search for a cryptographic signature to the block in the form of a hash. Once it is matched, the block closes. And the miner is rewarded for this in the form of a crypto currency.
The authors of the book “How the technology behind Bitcoin, changing money, business and the world” attempted to characterize the principle of the work of the blockbenches by ordinary people understandable to them:
“Bitcoin or other crypto currency is not stored in a file. Information about transactions is in a global, public database – Blockchain. It confirms and accepts the operation of this large P2P network. The whole circuit is distributed: it is supported by computers all over the world. A central server that could be broken or hacked does not exist. The block is public and very reliable at the same time, because it uses encrypted data. “
The functioning of the blockage and its security is provided by the miners and other members of the detachment. They are also called nodes or nodes. There are full nodes. These are miners and ordinary users of full-fledged wallets. This means that they have a full version of the blockbuster on their computer or other device. Its volume is constantly growing. If in 2015 it occupied 35 gigabytes of memory, then in 2017 it is already over 100. Because of this, the number of high-grade nodes began to decline. An example of a full-fledged purse is Bitcoin-Core. The number of complete nodes in the Bitcoin blockbuster can be viewed on the Bitnodes service.
The more in the block of active full nodes – the faster the transaction information is processed. Blokchein seems to be able to combine incongruous. It is very reliable and decentralized at the same time. All participants who support the work of the chain are equal to each other. There is no server or any processing center. It turns out that the whole block is not based on a trusting relationship. For there is no guarantor, at first sight. However, in essence, each user of the blocking system is the guarantor. Decentralization of the network allows data transfer between entities representing different countries, jurisdictions simply by agreement among themselves. Straight. Without any intermediaries or regulators. The block is built so that operations can not be blocked.
Blocking technology and its features
Earlier we mentioned that the information in Blockchain is open to anyone. This means that you can view the transaction history and the path it was taken. Information about the size of the transaction is also open. In this case, the identity of the addressee and addressee is not disclosed. This is the transparency of the block.
Access to Blockchain occurs using special keys that guarantee the reliability of the entire network. He has every user. A key is a set of cryptographic records. It is absolutely unique, which guarantees the impossibility of data substitution and hacker attacks. To do this, crackers need to access all the computers on the network.
The mechanisms that ensure the functionality and reliability of the block are Proof of Work or PoW algorithms, work done, and Proof of Stake or PoS, confirmation of the share. Thanks to them, a consensus is reached in the detachment.
The algorithm of Proof of Work is used in Bitcoin. The mechanism of his work is similar to the reporting in the office. Employees regularly make reports for verification, confirming the fact that they have completed a specific task. Without this, they will not receive a salary, since they did not confirm the fact of the work done.
PoW in the block check the calculations generated during the creation of a new block. Here the following model is used: the block is recognized as true and closed, provided that the value of its hash is less than the signature required by the miners. That is, a certain cryptographic cipher shows the authenticity of the block. And as the “auditors” that verify the authenticity of the block, there are nodes.
Now in the Bitcoin network the block is created within 10 minutes. At that moment, the signature search is performed. And already the test is instantaneous. The algorithm is often criticized due to the fact that its work requires large computing power. And it is for this reason that when transferring bitcoins between wallets a commission is charged. So there is a payment for the used computing power.
Against this background, a new algorithm was created – Proof of Stake. One of the associates of PoS is the founder of the Ethereum crypto currency, Vitalik Buterin. According to him, this algorithm is not as resource-intensive, and in general, cheaper than PoW. The Ethereum crypto currency block transfers from PoW to PoS.
If in Proof of Work the computational power comes to the fore, then the balance of the wallet plays the role in Proof of Stake. Implementation and confirmation of transactions will occur without the active participation of computer technology, but thanks to active coins on purses. Ideally, all owners of crypto currency on the block with PoS will act as investors. The role of mining will go to the background. However, the algorithm has significant drawbacks – it is possible to conduct duplicate transactions.
The optimal variant of the algorithm for blocking can be a combination of PoS and PoW. So far this mechanism has not been finalized, although it is used in some altcoyins: KATZcoin, Blackcoin, Espers.
At this stage of its development, the blockage has both advantages and disadvantages. We have systematized them into a table.
|Decentralization – the members of the network are equal to each other and can exchange data directly||Scalability – if the Bitcoin blockage accounted for the proportion of Visa transactions, then its size would reach hundreds of terabytes|
|Reliability – data replacement and hacker attacks are excluded, since special encrypted keys are used||Fraud – transfer of data blockage occurs irreversibly.Because of this, it is not possible to roll back the operation, even if it was done by mistake|
|Transparency – all blocks are available for public viewing. You can check the traversal for any transaction||Attack of 51% – if in Bitcoin’s blockbuster 51% of computing power will belong to one device, then integrity will be violated|
|Universality – blockage can be used not only in the financial sector, but also in other spheres of life (jurisprudence, real estate)|
Where to use blockade
The blockade appeared along with the pioneer of all Bitcoin crypto currency. We spoke about its functional capabilities and “duties” above. Blocker guarantees the execution of transactions and stores all data about them.
A qualitative step forward was made by Vitalik Buterin and his associates. The blockade of crypto currency Ethereum is often referred to as the second generation. It has its own architecture features.
If Bitcoin was originally modeled for financial transactions, the developers of Etherium managed to implement a peer-to-peer network, in which programmed algorithms can be executed. They are called smart contracts or smart contracts. The essence of such contracts is that their fulfillment occurs when certain conditions are met.
Smart contract on the example of a transaction for the purchase of real estate:
Obviously, blocking technology is relevant not only for crypto-currency transactions, but for the entire financial industry as a whole. All that is associated with transactions can be supported by blocking.
The prospects for Blockchain in the financial sphere were recognized by the world’s largest banks. Back in 2013, the consortium R3 was created. There included such banks as JP Morgan, Goldman Sachs, Santander, ITG and others. The group is testing the decentralized registry in the banking sector. Individual banks also invest in block-start-ups, which regularly appear in the last few years.
The banks’ interest in technology is related to the potential threat that is posed to them by crypto-currencies. Blocking will help reduce transaction costs, make them safer. However, the implementation of a fully decentralized protocol in the banking sector will undermine it from within.
Practicality of the block is unquestionable in all matters relating to data storage and authentication. Potentially, this decentralized data system is capable of destroying corruption . In the blockroom you can record the dates of birth of people, financial transactions, fingerprints. Keep information about documents like diplomas, passports, driving licenses. In the future, this can help in the fight against various kinds of fraud.
Examples of the use of blockage in various spheres of life, in addition to finance:
- Identification of the person. Based on the technology of the block system, services exist in the field of identification and confirmation of access rights. They create a digital analog ID card. Such start-ups include HYRP, BlockVerify, OneName and others.
- Copyright. The Ascribe platform uses a complementary registry in which artists, musicians, and inventors can store copyrights using encrypted identifiers.
- Voting. So far, the open registry is used only in private voting. However, at the University of Virginia, they want to introduce a technology based on the blockbuster. This will reduce the likelihood of falsification to zero.
- Management and jurisprudence. The potential of Blocckhain in this sphere is unlimited. Ideally, a system can be created with reporting by representatives of local and state authorities, storing data on the budget. Already, there are projects like Borderless, which combine legal and economic services.
- Music. The Bittunes project allows songwriters to retain their rights and sell their own works. There are other services aimed at the dissemination of independent music and the promotion of performers.
- Charity. Blokchein with its ability to record and store data is very effective in the field of charity. So in the GiveTrack platform there is an open information about the donations to the funds and their costs. This is an effective tool in the fight against “terrorists of charity.”
- The property. The introduction of blockages into the real estate sector is capable of significantly improving it. The process of buying and selling will accelerate, a tool will appear for the reliable storage of data on property rights and so on. The technology of blocking is used in the sphere of services, exchange and ordinary trade. Potentially, it can be useful wherever reporting is required, authenticating something, storing data. The potential is unlimited.
Is it realistic to know all the subtleties and possibilities of blocking? No. 99.9% of the world’s population do not need this. It is more important to understand the very principle of technology and the way it is arranged. And with this comes the evaluation of the potential of the detachment. Perhaps this will even change your life.