The innovative technology of the blockchain (English blockchain) has unique features of functioning in almost any area of society. Its distinguishing feature is the organization of the process without intermediaries.
What is blockchain?
Back in 2008, blockchain technology formed the basis for the mutual settlements of the Bitcoin cryptocurrency. Using blockchain allowed to bring cryptocurrency transactions to the highest level of quality, which led to a tremendous increase in the popularity of Bitcoin. We also recommend reading Gartley Butterfly Indicator.
This technology has long been recognized as revolutionary, of equal importance to the emergence of the Internet. Blockchain is an information database. Now imagine that this network is installed on every computer of a user in a country or world.
It will lead to the fact that the conduct of any transaction, purchase or sale, will be recorded on each of these computers. Regardless of the number of PCs connected to blockchain technology, if at least 51% of these devices confirm a particular operation, the transaction will be considered approved.
Decentralization of information or how the blockchain works
Well, what is it that the information will be distributed on different computers of the blockchain system, you can ask. And this is the advantage of technology - data from one source, and all users. The Bank is a centralized source and custodian of information - all data is held by it.
All transactions with clients pass through the servers of this financial institution. As a result, the cost of the operation increases due to commissions, and personal information is no longer own. Also, information in the same hands can always be used or changed with impunity. The situation is different from the work of the blockchain.
The technology operates based on a mathematical algorithm. Digital records are formed into blocks (English block - block), which are connected in a chronological chain (English chain - chain). The PC network analyzes the new information, and if the result of their work converges, a new block is formed with a unique signature assigned to it.
Safety and reliability technology
Since the data register in the blockchain is no longer stored in one place, but distributed on the computers of the network. It becomes impossible to replace data on a transaction, passport, certificate, or financial transaction that is already formed in blocks and has its signature.
Any attempt to change the information block will be inconsistent with the data of other participants in the blockchain, which will immediately be perceived as falsification of information and a manifestation of fraud!
The generated block can no longer be changed, and, accordingly, the registry cannot be faked. And this, in turn, is a guarantee of high reliability and data security, virtually eliminating fraud. That is why the use of blockchain in any of the spheres of society's life can positively affect it.
So that's why Bitcoin is so successful.
From the previous, you can already understand the secret to the success of this cryptocurrency. But let's summarize the benefits of blockchain! All transactions are recorded on users' PCs and confirmed. The presence of confirmation of mutual settlements from participants in the blockchain creates a new information record.
This fact excludes the reuse of the same currency for settlements. The absence of intermediaries and mutual agreement directly between participants, high reliability, and data security allowed to reduce transaction costs, increase the security of transfers, and increase the transparency of financial transactions.
Where can blockchain be used?
Investing in blockchain technology is growing every year, which indicates the fact that it will soon be applied in broad and large areas of society. According to Goldman Sachs, if the financing of this information base amounted to $ 95 million in 2013, then in 2015, the amount of funds amounted to $ 482 million.
Since the mechanism of functioning of the blockchain network is universal, it can be used not only for cryptocurrency settlements but also in any area of society. For example, you can create an information base for insurance claims, hold political elections in any country as transparently as possible without interfering with the results from outside.
A unique example of the use of blockchain is the ability to solve the problems of refugees from the Middle East without documents. The Brazilian startup Bitnation invited the governments of the EU countries to record all refugees on the virtual passport in the blockchain. A condition is the recognition of this system by all participating countries.
Since blockchain is an information database, you can store any data in it: information about fines, contracts, certificates, and financial transactions. The use of the blockchain will simplify the trading and settlement of money, which has become so complicated over time.
