What is blockchain?
Blockchain is a decentralized system (register), which provides accounting and storage of information about transactions, as well as confirmation of the identity of participants using cryptographic information protection tools. That is, blockchain is a type of structuring of data in the form of an ever-growing chain of blocks in which information is stored in a secure, verifiable and permanent form. The transaction is constantly written in a chain of blocks and can not be changed by anyone.
How safe is blockchain technology? Is it possible to hack blockchain?
Although complete safety is not possible, the blockchain system offers almost perfect protection. To date, this is the most secure type of data structuring. This is due to the decentralization of the network, multi-stage procedure of verification, complex structure of cryptographic keys and the very sequence of operations. In theory, it is possible to hack the blockchain network and get access to the data, but this is an incredibly difficult and resource-intensive process. In addition, a large number of interested companies are constantly working to improve the means of protecting the network
What is the difference between bitcoin and blockchain?
Bitcoin is a cryptocurrency created and managed only on the Internet, functioning without a central bank or regulatory organization. There are no physical Bitcoins, only balances stored in a cloud, supported by a huge amount of processing power. Blockchain is a technology based on which Bitcoin works. This is a database that is simultaneously stored on multiple computers connected to each other on the Internet. Each transaction is anonymous, it is recorded and safely stored.
What are the possible options of using blockchain technology?
To date, the blockchain is most known in the financial sector - on the basis of technology, cryptocurrencies are created, the blockchain is used for transactions and document circulation in financial organizations. However, the blockchain system can be very useful beyond the financial sphere. In jurisprudence, block-technology is the basis for the functioning of smart contracts, it also ensures transparency of copyright, helps to verify the authenticity of data. In the field of management (both public and private), blockchain can optimize the work of various departments and divisions, reducing the total amount of bureaucratic costs, ensuring transparency of processes for a wide audience and being used as an electronic voting tool.
WHAT IS THE DIFFERENCE BETWEEN PUBLIC AND PRIVATE BLOCKCHAIN NETWORKS?
The main difference between public and private blockchain networks lies in the number of people who are allowed to participate in the network, execute the consensus protocol and maintain a common register. The public network of blockchain implies openness, so everyone can join and participate in the network. However, if the user does not have a significant amount of processing power or wants to get more privacy, a private network can be a more attractive option. A private network allows regulation of participation through an authorized network. This imposes restrictions on who is allowed to participate in the network, and in what transactions.
WHAT IS THE CONSENSUS WITHIN THE FRAMEWORK OF BLOCKCHAIN TECHNOLOGY?
The consensus mechanism is a set of rules that is coordinated by computers (nodes) on the network, launching the network software. These rules ensure the operation of the network and its synchronization. The consensus protocol establishes rules regarding the procedure for adding blocks to the chain, regarding the validity of the blocks and the resolution of conflicts. That is, when the miner adds a new block to the chain, the computers on the network (nodes) check this block for compliance with the rules and then decide to add the block to the chain or reject it.
HOW THE BLOCKS ARE INSPECTED?
Each full node in the network performs a block check. When a new block appears, each node that receives it executes a list of checks. The two most important checks are confirmation of work (if the block provides enough work for inclusion in the chain) and the validity of all transactions (each transaction must be valid).
WHAT ABOUT THE MINING?
Mining is the process of recording new transactions and, accordingly, creating new blocks in the blockchain network. That is, the miners use the computing power of their machines to maintain the network and develop it further. In return, the miners receive rewards in the form of crypto currency tokens. This procedure is also necessary for the distribution of new coins on a decentralized basis.
HOW CAN THE BLOCKCHAIN TECHNOLOGY BE USED IN THE ENERGY SECTOR?
Practical examples demonstrate promising prospects for using this technology. In addition to reduction of transaction costs throughout the system, increase in the efficiency of processes and thus the provision of benefits to customers, the technology can allow all parties involved to interact directly. This ensures optimal loading of existing generating capacities while ensuring the most favorable price for the consumer. Within the framework of such a model, the role of consumers, which are simultaneously producers, increases significantly.
WHAT IS A SMART CONTRACT?
Smart contracts are self-executing contracts in which the terms of the agreement between the parties fit right into the code. Accordingly, the smart contract monitors the specified conditions for the achievement of results or breach of contract and automatically decides on the performance of the contract. Smart contracts allow one to make transactions and enter into agreements between anonymous parties without the need for a central regulatory body, legal system or external enforcement mechanism. They make transactions traceable, transparent and irreversible.