Blockchain technology was used to protect Bitcoin cryptocurrency from double expenses and fraudulent operations. The ability to distribute information between network participants without copying to individual nodes contributes to the system decentralization. Now they are trying to introduce Blockchain technology into other areas of life.
What are Blockchain technologies?
Blockchain is a chain of blocks that are built sequentially and continuously. Changing the information in the block leads to changes in the entire subsequent chain, making it impossible to make changes inconspicuously. Blockchain or distributed registry technology can be used to record not only financial transactions, but also any data that needs to be kept unchanged.
How does Blockchain work?
The digital registry keeps track of transactions in a peer-to-peer network. Peer-to-peer is a network of nodes of the same order, the information in which is equally important. Once other users have approved the block, it joins the chain, making changes to it almost impossible. Only the owner of the power 51% of the entire network can change the record (in the history of Bitcoin, this did not happen).
The algorithm feature is the absence of a third party in transactions. Participants see the operations they create or receive. Other network members – miners – take charge of data authentication for a commission. Cryptographic hashing algorithms and digital signatures are used to increase reliability to ensure the integrity of transaction parameters.
The simultaneous operation of the consensus mechanism and the hashing algorithm prevents the possibility of attack. The consensus mechanism is responsible for the exact copying of materials in the block to all network nodes. If there is a simultaneous invasion on several nodes, the remaining retain the original information. The SHA256 hash algorithm returns a new hash value when you make the slightest change to the blocks.
Protection against money laundering occurs with the help of electronic-digital private keys. The sender's identity is hidden from most users, but they see the public key. Thus, each member of the community has equal rights and opportunities.
Why is Blockchain good?
The technology is universal for creating secure databases:
Lack of a third party controlling the system. All data is duplicated on each network node without involving the central server.
All transactions are transparent.
Sensitive data encryption. All network participants see all transactions but do not have access to the sender’s addresses.
Transactions are secure. Attempts to make changes without confirmation by private key holders and miners are rejected.
How will Blockchain change the world?
Blockchain spheres are databases requiring increased security, resistance to attacks, and user fraud. On the Blockchain, they develop apps for business, healthcare, financial and investment markets, and real estate. Distributed ledger technology allows you to:
Securely administer networks by eliminating hacker attacks and breaking the central server.
Transactions are more straightforward and faster, without the third controlling party involvement.
Protect copyright, since the time of placing information in the Blockchain is fixed.
Use the DNS information transfer system to prevent DDOS attacks.
Provide users with secure access to sites without the ability to intercept passwords by malicious programs, thanks to the storage of digital certificates.
Blockchain is an ideal base for maintaining patient records, prescribing medications, collecting data from medical devices (equipped with IoT) and exchanging data with insurance companies. eHealth Estonia applications implemented the technology, the joint projects of the eHealth Foundation and Guardtime, PokitDok, and FarmaTrust.
Blockchain Identity Management
A person’s digital identification will be simplified with the widespread adoption of Blockchain. Shaan Ray, on his Twitter blog about new technologies on Twitter – Twitter.com/ShaanRay – shows the current situation with examples.
When people use various services on the Internet: Paypal, Amazon Pay, Google Wallet, and other sites, they leave a digital footprint. Personal user data falls into multiple databases and is stored there. If any information changes, for example, the address, then the "digital clone" becomes irrelevant but continues to exist.
There are also several additional problems:
The need to invent new passwords for each resource.
Inability to update information in all profiles at once.
Having cracked one database, hackers gain access to all services on which the user is registered.
Private companies BlockAuth, Civic, Existence ID and others use digital identification of employees without a centralized server. The Bitnation platform provides an almost identical range of services, like those in government offices, but with the principle of decentralization.
IBM and SecureKey Technologies have proposed a blockchain algorithm with different access levels. Since a distributed network can be public and closed, participants can independently choose the circle of people to whom the data will be visible.
Blockchain Web 3.0
The Web 3.0 IT stack is currently under development. The modern Web 2.0-based Internet has centralized core servers. DNS networks allow you to protect sites about DDoS attacks and accelerate the demonstration of accessible pages. But this does not solve the problem 100%. Also, there is always a risk of user data theft.
Internet Web 3.0 using Blockchain will become transparent and secure. The technology also integrates with IoT – the Internet of things. Any devices with artificial intelligence: refrigerators, air conditioners, microwave ovens, home helpers Alexa and Google Assistant – will be able to connect to Web 3.0 automatically.
The Web 3.0 IT stack is entirely user-centric. A P2P network is about connecting and creating content quickly. The posted information will not be controlled by the media, monopolists, or government organizations. The semantic web also remembers the user's behavior on the Internet and offers them more relevant pages (ads, social networks, music, films).
How to make money with Blockchain?
The most obvious way is to mine cryptocurrencies. But to confirm transactions, you need equipment with a high hash rate, and this requires a significant initial investment. It is now possible to mine Bitcoins either using a specialized farm or as part of a large pool. Mining altcoins is more accessible, but it is not known what their value will be in the near and distant future.
A few more options:
Participate in ICO projects (with the initial placement of tokens) as an investor. Before investing, study the goals of the startup, the company white paper posted on the site, and the composition of the founders.
Create your own ICO as a developer. If successful, you can attract record amounts in a short time. But the governments of Pakistan, Morocco, Nepal, and China prohibit this type of investment.
Trading cryptocurrencies on exchanges and speculating on prices.
Ways to buy Bitcoin
There are three legal ways to purchase digital tokens:
Buy coins on cryptocurrency exchanges. Popular platforms such as EXMO offer the safest way to buy. For their services, exchanges charge a commission for depositing and withdrawing money, as well as a small percentage for a transaction depending on the amount of the transaction. There are cheaper options, but they usually operate in a very limited area, for example, in several states of America.
Exchange services operate on the principle of ATMs. Different exchanges offer different types of tokens. You can pay with other cryptocurrencies, VISA, MasterCard bank cards and SEPA transfers. To store coins, you will need a crypto wallet or an account on the exchange.
Direct transactions between users of the Bitcoin network are also acceptable. At a personal meeting, payment by cash, card, or a bank transfer is possible. Tokens are transmitted through the disclosure of secret keys, sometimes together with a wallet.
A distributed digital registry is applicable in many areas of life. Its use guarantees system fault tolerance, reliability, relative anonymity, and transparency for the community.