What is blockchain?

Define

Blockchain is a blockchain technology that allows the transmission of data securely based on an extremely complex encryption system, similar to a company’s accounting ledger, where money is closely monitored. and record all transactions on the peer-to-peer network.

Each block contains information about its creation time and is linked to the previous block, along with a timecode and transaction data. Once the data is accepted by the network, there is no way to change it. Blockchain is designed to resist fraud and alteration of data.

Types of blockchain technology

Cryptography: to ensure transparency, integrity and privacy, blockchain technology has used public key and hash function.
Peer-to-peer network: Each node in the network is considered as a client and also a server to store a copy of the application.
Game theory: All nodes participating in the system must obey the rules of the consensus game (PoW, PoS, …) and are motivated by economic motivation.

Blockchain classification

Public: Anyone has the right to read and write data on the Blockchain. The process of validating transactions on this Blockchain requires a lot of participating nodes. Therefore, to attack this Blockchain system requires a huge cost and is really not feasible.
For example: Bitcoin, Ethereum, …
Private: Users are only allowed to read data, not write because this belongs to an absolutely trusted third party. Since this is a Private Blockchain, the transaction confirmation time is quite fast because only a small number of devices are required to validate the transaction.
For example, Ripple is a form of Private Blockchain, this system allows 20% of nodes to be fraudulent and only the remaining 80% is stable.
Permissioned (also known as Consortium): a form of Private but adds some other features, this is a combination of Public and Private.
Example: Banks or joint venture financial institutions will use their own Blockchain.

Versions of blockchain technology

Blockchain Technology 1.0 – Currency and Payment: The main application of this version is cryptocurrency: including currency conversion, remittance, and the creation of a digital payment system. This is also the area most familiar to us that sometimes quite a lot of people mistakenly believe that Bitcoin and blockchain are the same.
Blockchain Technology 2.0 – Finance and Market: Banking and financial processing applications: scaling of blockchain, the inclusion of financial and market applications. Assets include stocks, checks, debit, title, and anything related to an agreement or contract.
Blockchain Technology 3.0 – Design and Operational Monitoring: Bringing blockchain beyond financial borders, and into fields such as education, government, healthcare, and the arts.

Features

Impossible to forge, can not destroy blockchain chains: in theory, only quantum computers can decode blockchains, and blockchain technology disappears when there is no Internet in the world.
Immutable: data in blockchain cannot be changed (can be edited but will leave a trace) and will be stored forever.
Security: The information and data in the blockchain are distributed and absolutely safe.
Transparency: Anyone can track blockchain data going from one address to another and can track the entire history of that address.
Smart contracts: are digital contracts embedded in if-this-then-that (IFTTT) code, allowing them to self-execute without the need for a third party.

How blockchain works

The most known and discussed application of blockchain technology is cryptocurrency. Bitcoin is a unit of digital currency with the code BTC, like the US dollar itself has no value, it only has value because there is a community that agrees to use it as a unit of transaction goods and services.

In order to keep track of the amount of Bitcoin that each person owns in certain accounts and keep track of the transactions arising from that, we need a ledger, in this case, it is the blockchain and this is a digital file that keeps track of all Bitcoin transactions.

This ledger file is not stored in a central server, like in a bank or in a data center, but rather distributed worldwide through a network of peer-to-peer computers. data storage and computation execution. Each of these computers represents a “node” of the blockchain network, and each node has a copy of this ledger file.

Practical application of blockchain technology

Cryptocurrencies: The most common use of blockchain today is cryptocurrencies like Bitcoin or Ethereum. When people buy, exchange, or spend cryptocurrency, the transactions are recorded on a blockchain. The more people use cryptocurrency, the more popular blockchain can become.

Banking: In addition to cryptocurrencies, blockchain is being used to process transactions in fiat currencies like USD and EUR. This technology makes bank deposits faster and transactions verified faster outside of normal business hours.

Asset Transfer: Blockchain can also be used to record and transfer ownership of various assets. This technology is now very popular with digital assets like NFT – a representation of ownership of digital art and video.

Smart Contracts: Another application of blockchain is self-executing contracts commonly referred to as “smart contracts”. These digital contracts are issued automatically once the conditions are met.

Supply Chain Monitoring: Supply chains include a large amount of information, especially as goods travel from one part of the world. Storing this information on the blockchain will make it easier to go back and monitor the supply chain.

Voting: Experts are looking to apply blockchain to prevent fraud in voting. In theory, blockchain voting would allow anyone to submit votes that cannot be tampered with.

Conclusion

Currently, there are many large companies and corporations that are building their own networks using blockchain technology. It is certain that Blockchain will make a revolution in the next few years and play an increasingly large role in changing the world of IT.

Hopefully, CoinCu’s article has helped you better understand blockchain and the applications of blockchain technology in practice.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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