Blockchain is a hot topic around the world today, along with cryptocurrency it is becoming the focus of a lot of debate. Blockchain is considered a "key" technology for digital transformation and building future information technology platforms.
So what is blockchain? How does blockchain work? What are the applications of blockchain in life today? Where is blockchain stored? Let's find out with VakFx now!
1. Origin of Blockchain
In 1991, Blockchain was described by W. Scott Stornetta and Stuart Haber. The goal is to stamp time into documents so that they become immutable. This means you cannot modify the data in any way.
In 2008, world finance collapsed. The golden time for an anonymous character or group called Satoshi Nakamoto created an open-source protocol called Bitcoin.
Do not misunderstand about Bitcoin and Blockchain. Bitcoin is an asset and is of interest if you are an investor. The most interesting thing is not the price but the Blockchain technology.
The world's first known blockchain technology!
2. What is blockchain?
Blockchain is a chain of blocks containing information. Blockchain is like the main accounting book (ledger) of a company where all activities related to the money of the company are closely monitored.
In this case, Blockchain is a ledger operating in the field of technology, and stored data is digital data.
3. What is blockchain used for?
Blockchains are used to store information in interconnected information blocks. It is managed by everyone who participates in the system instead of an individual third party like the state or central bank.
Moreover, this technology was created to combat data changes in the system. It also has a very special feature that the data transmission does not require any intermediary to confirm the information.
Because in the Blockchain system, there are many independent nodes capable of authenticating information in the system without requiring "signs of belief". Information entered into the blockchain will not be changed and added only with the approval of everyone in the system.
This is a system to ensure very high safety for data before the risk of theft. Especially sensitive data such as online bank accounts, payment card accounts ... Even if a part of the blockchain system is hacked, other parts are not affected and continue to work to protect Information protection.
4. The structure of Blockchain
Each block will be stored in 3 parts:
- Hash of the current block
- Hash of prev block
Data will depend on the type of Blockchain. Bitcoin's blockchain, for example, will contain transaction data.
Transaction data includes Information of the sender, receiver, and some coins sent.
- Hash of the current block
Hash of the current block as a feature for identification. It is unique and does not overlap like our fingerprints.
- Hash of the previous block
Thanks to this hash, the linked blocks create a chain. However, the first block will not be associated with any blocks. Because it was created first.
This first block is called the Genesis block, translating into Vietnamese as "the original block".
5. Main features of Blockchain technology
Blockchain technology acts as a ledger recording all transactions that occur in the system. The main features of blockchain are as follows:
Can't fake, can't destroy blockchain chains
- Smart contract
Cannot be fake, can't destroy blockchain chains
Blockchain chains are nearly indestructible. In theory, only quantum computers can interfere and decode blockchain chains. It will only be destroyed when there is no internet worldwide.
Data in the blockchain is nearly immutable. It can only be modified by the person who created it. But there must be a consensus of nodes on the network and that data will remain forever.
- Data security
The information and data in blockchain chains are distributed and safe. Only the owner of the private key has access to that data.
Anyone can follow the path of data in the blockchain from one address to another and can track the entire history of that address.
- Smart contract
Smart contracts are digitally embedded by an if-this-then-that (IFTTT) code in the system. Allow them to execute without third parties. Blockchain does not need a third party to join the system.
It ensures that all parties are aware of the contract details and the terms are automatically fulfilled once the conditions are met.
6. Why is it impossible to fix data on Blockchain?
- Hash Mechanism
To modify the data of a block, the Hash of that block will be changed. The blocks behind it being modified blocks become invalid. Because now the Hash of the previous block is not the same as the modified block.
So the only way to modify the data of a block is to make all the blocks behind it valid.
- Consensus mechanism
To make the block valid, you must intervene in the block and change the Hash for a while. But because the date calculator can calculate very quickly.
Each second, they can calculate hundreds of thousands of hashes. This affects the surge protection.
At this point, it is the pure copper mechanism that will decide who will add the new block. The goal is to prevent the string from being overwritten. From there ensure integrity and confidentiality.
- P2P Network
The blockchain uses peer-to-peer network architecture instead of a management center. This means that anyone can join the network. Each instance in the network acts as a node. They will receive a full copy of the blockchain. They use this copy to confirm everything is still in order.
All nodes create consensus. If the consensus is greater than 50%, the block is valid and added to the blockchain. Peer networks combine with consensus to create a layer of protection against harmful activities.
7. How is blockchain classified?
In the Blockchain system, there are 3 main types: Public, Private, and Permissioned:
- Public blockchain
This is a blockchain system that anyone can read and write data on.
The process of authenticating transactions on Blockchain requires thousands or even thousands of nodes to participate.
Therefore, it is impossible to attack this Blockchain system because of the high cost. Examples of public blockchain: Bitcoin, Ethereum ...
- Private blockchain
Private: This is a blockchain system that allows users to only read data, not write because this belongs to a trusted third party.
This third party may or may not allow users to read data in some cases. The third party is free to decide all changes to Blockchain.
Because this is a Private Blockchain, the transaction confirmation time is quite fast because only a small number of devices are required to authenticate transactions.
For example, Ripple is a form of Private Blockchain, this system allows 20% of nodes to be fraudulent and only needs the remaining 80% to operate stably.
- Permissioned blockchain
Permissioned: Also known as the Consortium. This is a form of Private Blockchain but adds certain features.
It combines the "belief" when participating in Public and "absolute faith" when participating in Private.
For example, Banks or financial institutions will use their Blockchain.
8. Main versions of Blockchain
Currently, blockchain technology has 3 main versions:
- Blockchain 1.0
Blockchain 1.0 - Currency and Payment: The earliest and first version of blockchain.
The main application of this version is the work related to cryptocurrencies. It includes currency conversion, remittances, and the creation of a digital payment system.
This is also a field familiar to many people, sometimes quite a few people mistakenly think Bitcoin and Blockchain are one.
- Blockchain 2.0
Blockchain 2.0 - Finance and Markets: This is the second version of blockchain.
Its applications are financial and banking processing: expanding the scale of Blockchain, bringing blockchain integration into financial and market applications.
Assets include stocks, checks, liabilities, ownership, and anything related to a deal or contract.
- Blockchain 3.0
Blockchain 3.0 - Design and Operation Monitoring: Currently, this is the highest version of blockchain.
In this version, Blockchain technology will transcend the borders serving the financial sector only. It targets other areas such as education, government, health, and the arts ...
9. Consensus mechanisms in Blockchain
The consensus mechanism in Blockchain can be understood as the way that everyone in the blockchain system can agree on a transaction to occur in the system. Here are the common types of consensus mechanisms in the blockchain:
- Proof of Work
Proof of Work is the most common consensus mechanism, used in Bitcoin, Ethereum, Litecoin, Dogecoin, and most cryptocurrencies. This is a consensus mechanism that consumes quite a lot of power.
- Proof of Stake
Proof of Stake: This is a common consensus mechanism in Decred, Peercoin, and in the future, Ethereum and many other cryptocurrencies. This consensus mechanism is more decentralized, consumes less energy, and is not easily threatened.
- Delegated Proof-of-Stake
Delegated Proof-of-Stake: This is a common consensus mechanism in Steemit, EOS, BitShares. This consensus mechanism has low transaction costs; extendable; High energy performance. However, it is still somewhat focused because this algorithm selects a trusted person to authorize.
- Proof of Authority
Proof of Authority: This is a common consensus mechanism commonly found in POA, Network, Ethereum Kovan testnet. This consensus mechanism has high efficiency and good scalability.
Proof-of-Weight: This is a common consensus mechanism in Algorand, Filecoin. This consensus mechanism is customizable and scalable. However, the process of promoting development will be a big challenge.
- Byzantine Fault Tolerance
Byzantine Fault Tolerance: This is the common consensus mechanism in Hyperledger, Stellar, Dispatch, and Ripple. This consensus mechanism is highly productive, low-cost, and scalable. But still can not completely trust.
10. What’s the difference between Blockchain and Bitcoin?
Blockchain is a technology ledger, digitized, decentralized. Put simply, it is made up of digital information or blocks, stored in chains. When transactions are verified, the information stored by the blocks and blockchain increases in size.
Cryptocurrency works through Blockchain, as it is also a decentralized, digital system.
When identified as digital or virtual money, it uses cryptography for security and it is not owned by any particular agency - essentially immune to the control of institutions. Competent
Bitcoin was the first and original cryptocurrency, but now this list has expanded. Besides, Bitcoin was once at a time, the only Blockchain.
11. The application of blockchain
The first widely known useful application from blockchain technology is probably Bitcoin and virtual currencies. But currently, Blockchain is revolutionizing most industries such as education, health, e-commerce, international payments, supply chains, entertainment, tourism, etc.
Above is the article "What is Blockchain? Learn about the application of Blockchain blockchain technology ”. Hope to help you have more useful things about the blockchain.
If you have any questions or would like to share your knowledge of blockchain technology. Then contact us in the comment section below. We will reply as soon as possible.
Follow our official channels for up-to-date information about Blockchain and cryptocurrency.
- Website: https://vakafx.com
- Email: [email protected]
- Telegram: @vakaxasupport