What is the blockchain in simple words?

The blockchain (the Blockchain) is the cornerstone of cryptocurrencies and the term, which 90% of the Internet users have crossed. You 100% have heard it somewhere. In this article we simple and clear words, describe the term, which has already begun to change our lives.

Such attention to it associated with the revolutionary, which he brought. In this guide we will reveal in plain language the essence and concept of the blockchain, its role in the world of cryptocurrencies, we’ll talk about application in other areas of life. If you want, it is a kind of manual for dummies.

A description of the term

The term Blockchain partly reflects its objectives and purpose. Part of the “Block” is the block, “chain” is “chain”. It turns out that the Blockchain is a chain of blocks. And not just a chain. It is aged in a strict sequence.

What kind of blocks and what kind of chain? Blocks is data about transactions, deals and contracts within the system, presented in a cryptographic form. Initially, the blockchain was (and still is) the basis of Bitcoin. All the blocks are arranged in a chain, that is linked. To record a new block, you need the serial reading of information on the old blocks.

All data in the blockchain are accumulated and form a growing database. With this database, it is impossible to remove or clean the replacement/substitution of the block. And it is “unlimited” – there can be written an infinite number of transactions. This is one of the main features of the blockchain.

Work blockchain can be compared to Torrent. Functioning of the torrent is P2P (peer to peer – computer network, where all participants have equal rights). When we download some file from the tracker, then we do not use a Central server or repository. The file directly downloaded from the same party torrent as you. If peer to peer network will not be participants, and files to download you can not. Similarly, in the blockchain. All transactions are conducted between entities directly. And they are carried out due to the fact that all participants connected to the same network – the Blockchain.

Compare the Blockchain and Torrent

This technology was created along with the emergence of Bitcoin. It happened in 2009-m to year. Public entity-the Creator of the new virtual currency and the Blockchain I believe Satoshi Nakamoto. However, this person is mythologized in the world of cryptocurrency. A pseudonym behind which there is one or a few people, who decided (big) not to disclose his identity. It is obvious that the creation of the blockchain they have spent thousands of hours.

There are two types of chain:

  • The public Blockchain is the open, supplemented by the database. This kind of blockchain is used in the crypto-currency Bitcoin. Each participant can record and read data.
  • Private or private blockchain has limitations on recording/reading data. Can set the priority of the nodes. A subspecies of the Private Blockchain – blockchain exclusive. The chain established a group of persons involved in transaction processing.

Urging the intermediate results, we list the key features of the Blockchain:

  • Decentralization to the chain server. Each participant is the server. It supports the work of the entire blockchain;
  • Transparency – information about transactions, contracts and so on is stored in the public domain. However, these data cannot be changed;
  • Theoretical unrestricted – theoretically, the blockchain can be supplemented by the records indefinitely. Therefore, it is often compared to a supercomputer;
  • Reliability – to write new data required a consensus among the nodes of the blockchain. This allows you to filter operation and record legitimate transactions. To carry out the substitution hash is unreal. This feature of the blockchain is described in the picture below.