What is a blockchain? We will tell simple words

Perhaps, you already heard the term "blockchain", but haven't paid on it special attention, having counted as a frivolous fashionable word or a technical jargon. But we consider that the technology of a blockchain is a break with very serious consequences which will affect not only the sphere of finance, but also many other branches. In this article we will tell, what is it a blockchain simple words for understanding of everyone.

The blockchain (chain of units) is a distributed database at which data storage devices are not connected to the general server. This database stores permanently the growing list of the ordered records called by units. Each unit contains a time stamp and the reference to the previous unit.

Application of encoding guarantees that users can change only those parts of a chain of units which they "own" in the sense that they have private keys without which file recording is impossible. Besides, encoding guarantees synchronization of copies of the distributed chain of units at all users.

Imagine the digital clinical record: each record is also such unit. This record has a tag: date and time of introduction of this record. Initially it is considered mandatory will lock on change of records backdating because it is necessary that records about diagnostics, treatment, etc. did not allow different interpretation and remained in the initial look. Can get access to records only the doctor who has one private key, and the patient who has another. Then will get access to this information only those to whom one of these users will provide the private key (for example, hospital in general or to the certain expert). So for example the technology a blockchain in the medical database can be used.

In technology a blockchain safety at the level of the database is initially put. The concept of chains of units Satoshi offered in 2008 Nakamoto (Satoshi Nakamoto). It was for the first time realized in 2009 as a component of digital currency — bitcoin where the blockchain plays a role of the principal general register for all operations with bitcoins. Thanks to technology of a blockchain the bitcoin became the first digital currency which solves a problem of double expenditures (unlike physical coins or counters, electronic files can be duplicated and spent twice) without use of any authoritative organ or the central server.

Safety in technology a blockchain is ensured via the decentral server which is putting down time stamps and peer-to-peer network connections. The database which copes independently, without uniform center is as a result created. It does chains of units very convenient for registration of events (for example, introduction of medical records) and dataful operations, control of identification and confirmation of authenticity of a source.

Visual displays of the server decentralized bitcoin

How does the BLOCKCHAIN technology work?

Sometimes the technology a blockchain is called "The Internet of values", and we consider that it is a good metaphor.

Each person can post online information, and then other people can get access to it from any point of the world. Chains of blocks allow to send to any point of the world where the file of a blockchain, any values will be available. But you have to have a closed key created on a cryptographic algorithm to allow you access only to those blocks which you "own".

Providing someone your closed key, you in fact give to this person a sum of money which is stored in appropriate section of a chain of blocks.

In case of bitcoins such keys are used for access to addresses to which some sums in currency which are of direct financial value are stored. Money transfer registration function is implemented by it, usually such role is carried out by banks.

Besides, one more important function is implemented: installation of the relations of trust and confirmation of authenticity of the personality because nobody can change a chain of blocks without the corresponding keys. The changes which aren't confirmed with these keys deviate. Of course, keys (as well as physical currency) can be theoretically stolen, but protection of several lines of a computer code usually doesn't demand big expenses. (Compare, for example, to expenses on storage of gold reserves in notorious the Fort Knox).

It means that the main functions which are carried out by banks: authentication of the personality (for prevention of fraud) and the subsequent registration of transactions (then they become lawful) — can be carried out by a chain of blocks quicker and more precisely.

In what importance of BLOCKCHAIN technology?

Today we already everything have got used to share information through the decentralized interactive platform of the Internet. But when it comes about transfer of values (money), we are usually forced to use services of the old centralized financial institutions (banks) again. Yes, methods of payments on the Internet have appeared at once at the time of the birth of this network (the most obvious example is PayPal), but they, as a rule, demand integration into the bank account or the credit card, otherwise they can't be used really.

The technology a blockchain offers a tempting opportunity to get rid of it "an excess link". She can undertake all three important roles which are traditionally played by the sector of financial services: registration of transactions, confirmation of authenticity of the personality and signing of the contracts.

It will have huge value as around the world the market of financial services — the biggest on market capitalization. The translation at least parts of this system on technology will lead a blockchain to a rupture of a large number of communications in the sphere of financial services, but at the same time will allow to increase efficiency of these services considerably.

The third possible role of this technology (signing of the contracts) can be very useful and out of the sector of financial services. Besides issuance of one more currency (bitcoin), the technology a blockchain can be used also for storage of any kind of digital information, including a computer code.

This fragment of a code can be programmed so that it was carried out, only when both contracting parties enter the keys, thereby agreeing to signing of the contract. The same code can obtain information from external data flows (stock price, meteorological reports, headings of news and all the rest that can be analysed by the computer) and to make contracts which will be automatically registered when performing certain conditions.

This mechanism is called "clever contracts", and possibilities of their use are almost infinite.

For example, the intellectual system of a thermoregulation can transfer data on energy consumption to an intellectual electrical network. At consumption of a certain quantity of the electric power other chain of blocks automatically transfers the necessary sum from your account to the account of the energy company. Operation of the counter and process of drawing of accounts are as a result automated.

In our example with medical records the doctor or the patient can transfer the closed key to the medical device, for example, to Saccharum level monitor in a blood. Then this device can automatically, with keeping of safety requirements to record values of level of Saccharum in the patient's blood, and then, for example, to exchange data with the device for insulin injections which on the basis of these data will automatically support the normal level of this parameter of a blood.

It is also possible to use this approach for control of use of intellectual property, defining how many times the user can get access to information, share it or copy it. Still it can be used for creation of systems of vote with protection against falsifications, diffusion of information without acceptable restrictions and many other.