How Blockchain Works

Blockchain is a program designed to create decentralized databases.

The system is completely “open source”, meaning that anyone can view, edit and suggest changes to the basic code base.

Although Bitcoin has become increasingly popular due to its growth – it has been around since 2008 and makes it ten years old (computationally old).

The most important thing about Blockchain is that it is designed to create applications that do not require a central data processing service. This means that if you build and use a system on it (ie Bitcoin) – your data will be stored on about 1000 “independent” servers around the world (does not belong to any central service).

The way the service works is to create a “book”. This book allows users to create “transactions” with each other – the content of these transactions is stored in new “blocks” of each “blockchain” database.

Transactions must be encrypted with different algorithms, depending on the application that generates them. Because this encryption uses cryptography to “mix” the data stored in each new “block”, the term “crypto” describes the process of cryptographically protecting a new blockchain of data that an application can create.

To fully understand how this works, you need to evaluate that the “blockchain” is not a new technology – it just uses the technology in a slightly different way. At its core is an information chart known as the Merkel Tree. Merkle trees are actually ways to store chronologically arranged “versions” of a set of data in computer systems, and allow you to manage continuous updates to that data.

This is important because current “data” systems can be described as “2D”, meaning that there is no way to track updates to the underlying database. Data is basically kept as it is – with any update applied directly. If there is no error in this regard, it creates a problem, which means that the data must be updated manually, or it is very difficult to update.

Blockchain’s solution is essentially the creation of “versions” of data. Each “block” (“chain” with a database) added to a “chain” provides a list of new operations for this information. This means that if you can connect this function to a system (messaging, etc.) that facilitates the exchange of information between two or more users, you will be able to create a completely independent system.

That’s what we see with things like Bitcoin. Contrary to popular belief, Bitcoin itself is not a “currency”; public ledger of financial transactions.

This public book is encrypted so that only participants in transactions can see / edit the data (hence the name “crypto”) … but more than that, the fact is that the data is stored and processed. means he can (basic drawing).

Clearly, in addition to the problems with the basic idea of ​​Bitcoin, etc., the basis of the service is a system that works mainly on a network of processing machines (called “miners”). All of this works on a “blockchain” program – and we try to “stack” new transactions into “blocks” that update the Bitcoin operating database as much as possible.

Although many people blindly support blockchain, they actually have a number of vulnerabilities – most importantly, they rely on encryption algorithms used in almost completely different applications. If one of these algorithms fails or users are compromised in any way, the entire “blockchain” infrastructure may suffer as a result.