What is blockchain: important features of the technology

The question of what blockchain is is very relevant. This technology in the modern world is no longer a young phenomenon, since it is being introduced into almost all major areas of life. It is now used not only in Bitcoin and other cryptocurrencies.

Gradually, the exchange of money, documents and valuables acquires a new, higher level. Blockchain-based systems remove any intermediaries from commercial or business interactions, allowing transactions to be carried out directly between two or more parties.

Blockchain is considered by some as a revolutionary technology that can radically change the established, completely inconvenient regime and archaic state of affairs. Let’s look at what blockchain is and explore the key aspects of this unique technology.

How did blockchain technology come about?

Despite widespread statements published by illiterate bloggers, blockchain technology was not invented by Satoshi Nakamoto. He simply used it in his Bitcoin cryptocurrency. By the way, bitcoin is also not the first virtual currency – it simply became the most famous and remains the most popular to this day. But that’s not about that now.

So, the main stages of creating technology:

– the first formulation of the concept of blockchain – in 1991, this was done by scientists W. S. Stornett and S. Haber. They came up with an option for working with digital documents that uses cryptographic coding – hashing;

– for a long time the concept remained unnoticed and uninteresting for companies and programmers;

– launching a network with the RPoW protocol (repeated proof of work). Here the first token appears – in fact, the first cryptocurrency hashcash and clear descriptions begin to appear that answer the question of what blockchain is. In Reusable proof of work, double spending of tokens was solved by registering transaction participants on a special server, where the accuracy of information could be verified in real time;

– publication of the white paper of the first decentralized network with electronic money – Satoshi Nakamoto introduced Bitcoin. The hashcash cryptocurrency protocol was taken as the basis, however, in the blockchain ecosystem, transaction protection is provided by the peer-to-peer P2P protocol;

– January 12, 2009 – the first transaction of 10 BTC coins from Satoshi Nakamoto into Hell Finney’s cryptocurrency wallet.

Since then, blockchain technology has been used virtually unchanged, although developers are gradually creating and introducing new protocols. Configuration modifications are being invented, for example, in 2017 the sidechain concept was introduced. Simply explained, a sidechain is a side branch from the main (central) blockchain.

What is blockchain – key features of the technology

The modern development of cryptocurrencies inevitably creates interest among users regarding blockchain technology. The question of what blockchain is can be answered in simple words as follows: it is a distributed ledger system, where each element (node) is a separate copy of the structural chain.

As soon as changes occur in the central blockchain, “copies” are instantly updated in all nodes to the current state, so there is always the latest version of the blockchain with updates on the Internet. It is this feature that gives the technology one of its unique qualities – decentralization – that is, there is no central server.

Remember! Each computer on the Network on which the blockchain is installed is a separate server with its own current copy of the registry. It is constantly updated as soon as the next block is filled with hashed data!

The blockchain itself is a sequence of blocks in the form of a chain, where the last element is always open to receive information. The data is encoded using cryptographic encryption (hashing), which cannot be cracked by modern means.

In general, the features of blockchain technology can be formulated in several theses.

1. blockchain – a continuous sequence of blocks – grouped volumes of information, the size of which is determined by special algorithms. The parameters are set at the time of programming and cannot be changed in any way after the blockchain is launched;

2. Each block in any blockchain contains stored information from the entire chain, starting with the genesis block (the first);

3. After a certain amount of encoded data has been accumulated in the last block, the next block is connected. In this way, a chain of “cells” with information is formed;

4. The blocks of the cryptographic system are arranged in compliance with the strictest chronological sequence. They are connected to each other by a digital code signature generated through complex mathematical calculations. From here it becomes clear what blockchain is;

5. All blockchains are unique and cannot interact, connect or exchange fragments with each other;

6. Any changes in the system (transactions, conversions), for example, in Bitcoin or Monero, are necessarily hashed, receive a digital signature and are instantly distributed to all nodes of the system;

7. Blockchain works autonomously without connecting the resources of third-party servers. Its algorithms exist in virtual space, just like the chain itself;

8. Any blockchain has a dynamic state if any actions occur in the system. Let’s say in Bitcoin, due to constant transactions and conversions, the chain is constantly loaded with hashed information, which is synchronized and copied to millions of devices containing the Bitcoin blockchain. Each such device is called a node or node;

9. Important elements of the blockchain are nodes. In simple words, nodes are individual devices (computers, laptops, powerful smartphones) containing a complete version of the blockchain, the last block of which has the latest updates. On all devices, the blockchain is constantly updated as soon as a new empty element is generated and included in the chain.

So, let’s summarize what blockchain is

The theses and features of the technology described above give a general idea of the blockchain. This is a distributed registry in which information is recorded using special algorithms after the hashing process (encryption).

In this format, data is connected by digital signatures into a continuous sequence of files, where a strict chronology is maintained. Protocols group encoded information into three-dimensional structures that have a strictly defined size.

These are blocks that have their own size in each cryptocurrency or some other blockchain. Therefore, a continuously growing model in the form of a chain is formed. Now beginners should have a general understanding of what blockchain is.