What is blockchain and where it is used

What is blockchain and where it is used

In most cases, people usually associate the term “blockchain” with the bitcoin cryptocurrency. There really exists some connection since the first blockchain appeared in terms of the bitcoin. However, the possibilities of this technology are not restricted to the digital currency. Blockchain is applicable in many spheres. But first things first.

What is blockchain?

Blockchain is a way of data storage, a digital register of all operations that require a separate record. These operations can include driving rules violation, issued mortgage information, Civil Registry Office records or even a patient’s history.

The name of the technology came from the English word “blockchain” that literally means “chain of blocks”. In fact, these blocks are data storages. Each block stores the records mentioned above. The blocks are connected into a chain with the help of mathematical algorithms. The information in the blocks is not encoded but cryptographically protected from any changes.

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Blocks are created with the help of computers whose owners are called miners. They provide the computer capacity for the creation of these blocks and recording. The award is cryptocurrency: in a bitcoin blockchain this is bitcoin, in an Ethereum blockchain – ether, etc.

Thus, blockchain is a constantly increasing chain of blocks containing records about all operations. The chain copy or its parts are stored on many computers and work synchronically.

Blockchain advantages

  • Transparency. All cryptocurrency transactions records are made automatically in the blockchain and are always publically available. Each network user can look through the transaction data. It ensures transaction transparency and proper business credibility.
  • Anonymity. This advantage doesn’t contradict with the previous one. Unlike wallet addresses and transaction sums, the anonymity implies that the information about the transaction members is not public.
  • Absence of intermediaries. This advantage is connected with cost saving. With the help of blockchain, two parties can conduct transactions without any intermediaries.
  • Modification protection. Once the transaction is recorded in the block, it cannot be changed or canceled unless someone makes a new record. Theoretically, if the record in the block is somehow changed, it will be detected and rejected by the network automatically.
  • Hacking protection. The blockchain is decentralized, so it cannot be hacked. All blockchain data is stored on the whole computer network, not one server. Thus, system hacking implies access to all the computers. Up to now, there hasn’t been any successful blockchain hack attack.

The use of blockchain

The advantages of blockchain make this technology attractive to the banking sector. For example, the co-project of S7 Airlines and Alfa-Bank. They developed a platform for international letters of credit with the help of blockchain and smart contracts. Moreover, S7 Airlines and Alfa-Bank introduced blockchain in the system for purchasing tickets. It reduced the whole process from 14 days to 23 seconds.

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What is more, in Russia, blockchain is going to be used for the property rights registration. It will be a co-project of Vnesheconombank (VEB ) and Federal Service for State Registration, Cadastre and Cartography in Veliky Novgorod. All mortgage transactions and partnership agreements would be recorded in the blockchain. The technology would reduce transaction time and increase its safety.

There also exist examples of the blockchain integration in other sectors. For instance, Ascribe company helps creative individuals (painters, writers, etc.) to prove the authorship to their works with the help of blockchain. The company allows to create a unique digital number and a certificate of authenticity to prove the authorship. Ascribe can also transfer authorship rights in case of works purchasing.

In fact, there are many examples of blockchain usage: blockchain products, data maintenance, diamond mining register, digital identification, power industry, e-voting, gaming industry, public administration and all fields where records and transactions are required.

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