Blockchain is a continuous sequential chain of data blocks that are securely linked together using cryptographic hash functions.
Thanks to hashing (converting incoming data of any size into a unique set of characters of a fixed length), the records in each block remain unchanged — the peculiarity of the blockchain is that an attempt to change at least one character of the data in the block will lead to the necessity of change of all the data, not only in this one block, but also in all subsequent ones. This is possible due to the fact that each block in the chain contains not only its own hash sum (hash value), but also the hash sum of the previous block.
Thanks to this mechanism, each next block of the chain strengthens the verification of the previous one and, consequently, the entire chain as a whole. This principle can be compared to building a tower from wooden blocks: they can only be added from above; if you remove just one block from the base or from the middle, the entire tower will fall apart.
Blockchain can be called a distributed digital ledger that stores the provided data. For example, this may be information about transactions with cryptocurrency. In fact, such data can be stored in any secure database. But the uniqueness of the blockchain lies in the fact that it is decentralized, that is, a centralized administrator is not needed to make changes to the database and store information.
In the blockchain situation, numerous identical copies of the database are stored simultaneously on the devices of all participants that confirm the authenticity of the blocks, dispersed throughout the network. Unlike regular databases, where information is structured in the form of a table, the blockchain structures it into separate blocks combined into a chain.
The confirmation of the new block results in an automatic update of the registry and is displayed in each of the identical copies. There are both public blockchains, the blocks of which contain public information, and private ones, open only to authorized users.
Origin of the term. The term itself comes from the English phrase “block chain” — literally “a chain of blocks”. The first protocol similar to blockchain was proposed back in 1982 by US cryptographer David Chaum. The term “blockchain” itself was first used by the developer Satoshi Nakamoto (or a group of developers operating under such a pseudonym) in 2008. Blockchain technology was first applied in the creation of the first cryptocurrency — bitcoin.
The purpose of the blockchain is that digital information can be freely recorded and distributed, but not changed. Thus, the blockchain can be called an ideal basis for immutable, indestructible ledgers or records of transactions (operations).
transparency: all block data is freely available;
security and reliability: they are provided by the three principles of the blockchain — cryptography, decentralization and consensus;
independence: transactions occur without intermediaries;
relatively high transaction speed.
Scope of blockchain technology
Foremost, the blockchain is used as the basis for cryptocurrencies such as bitcoin or ether. Also, this technology allows saving data on ownership of non-replaceable tokens (NFTs). Along with the growing popularity of cryptocurrencies in recent years, the popularity of blockchain technology is also growing. It is increasingly used in various fields of activity to create immutable registries to track orders and payments, to automate various trading operations, to analyze medical research, to improve the accuracy and security of storing of medical records. Some countries are planning to maintain land registries using blockchain technology in the near future, and it may soon be used in the organization of elections.
Blockchain technology continues to evolve. Already now it is used by such well-known corporations as Microsoft, IBM, Sony and many others. But despite the fact that blockchain technology has potential in various areas of life, many still treat it with some skepticism.