You may have already heard the term "blockchain", but maybe did not pay much attention to it, considering it a buzzword or technical jargon. But we believe that develeopment of blockchain technology soulutuions is a breakthrough with very large consequences, which will affect not only the sphere of finance, but also many other sectors. In this article we will tell you what a blockchain is, in simple words.
Block (a chain of blocks) is a distributed database, in which storage devices are not connected to a shared server. This database stores an ever-growing list of ordered records, called blocks. Each block contains a timestamp and a link to the previous block. The use of encryption ensures that users can only change parts of the chain of blocks that they "own" in the sense that they have private keys, without which writing to the file is impossible. In addition, encryption provides synchronization of copies of the distributed chain of blocks for all users.
Security in blockchain technology is provided through a decentralized server that places timestamps and peer-to-peer network connections. As a result, a decentralized database is formed, which is managed autonomously, without a single center. This makes the blockchain very convenient for registering events (for example, making medical records) and data operations, identity management and authentication of the source.
How does blockchain technology work?
Sometimes the blockchain technology is called the "Internet of Values", and we believe that this is a good metaphor.
Everyone can publish information on the Internet, and then other people can access it from anywhere in the world. Blockchains allow you to send any values to anywhere in the world where a blockchain file is available. But you must have a private key created by the cryptographic algorithm to allow you to access only those blocks that you virtually "own".
When you give your private key to someone, you essentially transfer the money to that person, who's data is stored in the corresponding section of the chain of blocks. In the case of bitcoins, such keys are used to access addresses where some amounts of money are stored, representing direct financial value.
This implements the function of registering the process of transfer of funds - usually this role is performed by banks in nowadays economy. In addition, another important function of money circulation is implemented: establishing trust relationships and authenticating the parties identity, because no one can change the chain of blocks without the corresponding keys. Changes that are not confirmed by these keys are rejected. Of course, keys (like physical currency) can theoretically be stolen, but protecting multiple lines of computer code is usually not so costly as protection the big amount of money. (You can compare, for example, the cost of storing a gold reserve in the notorious Fort Knox). This means that the basic functions performed by banks (identity verification to prevent fraud and subsequent registration of transactions, after which they become legal) can be performed by blockchain faster and more securely.
What is the importance of blocking technology?
Today we already know how to share information through the decentralized interactive Internet platforms like BitTorrent. But when it comes to sending money, we usually have to reuse the services of old centralized financial institutions (banks). Yes, the methods of payments through the Internet appeared almost at the moment of the birth of this network (the most obvious example is PayPal), but they usually require integration with some financial authority, also you need to have a bank account or credit card, otherwise online payment method can not be fully used.
Blockchain technology offers an attractive opportunity to get rid of this superfluous party. It can carry on all three important roles that the financial services industry traditionally performs: transaction registration, identity verification and contracting.
The process of moving to blockchain technology is of great importance, because the world financial services market is the largest by market capitalization. The transfer of even a little part of this system to blockchain technology will lead to the severance of a large number of ties inside financial services, but at the same time this process will significantly improve the efficiency of such financial services.
The third possible role of blockchain technology, contracting, can be very useful outside the financial sector. In addition to issuing another currency (bitcoin), the technology of the block cryptography can be used to store any kind of digital information, including computer code.
This code fragment can be programmed so that it is executed only when both contracting parties enter their keys, thereby agreeing to a contract. The same code can receive information from external data streams (stock prices, meteorological summaries, news headlines and everything else that can be analyzed by the computer) and make contracts that will be automatically registered when certain conditions are met.
This mechanism is called the "smart contracts", and the possibilities of its application are almost endless.
For example, an intelligent thermoregulation system can transmit power consumption data to an intelligent electrical network. If you consume a certain amount of electricity, another chain of units automatically transfers the required amount from your account to the account of the energy company. As a result, the electical meter operation and billing process are automated.
Or take an example of keeping medical records: a doctor or patient can transfer their private key to a medical device, such as a blood sugar monitor. Then this device can automatically record the patient's blood glucose levels in compliance with safety requirements, and then, for example, exchange data with an insulin injection device that will automatically maintain a normal sugar level based on this data.
This approach is also suitable for monitoring the legal use of intellectual property: blockchain can determine how many times a user is allowed to access, share, or copy some copyright protected information.
It can also be used to create voting systems with protection from falsifications, the dissemination of information without censorship restrictions and much more.
Our company offers the development of blockchain technology solutions based on your requirements. We have exeperinece in cryptography, networking, application development.