- Chains of blocks
- Addresses
- The principles of blockchain operation, simply put
- Where is the technology used?
- Conclusion
Nowadays, blockchain is one of the most popular terms. Crypto is associated with advanced technology and at first glance seems too complicated to deal with. However, this is not the case. Blockchain technology is very easy to understand.
Chains of blocks
Simply put, blockchain is a way of organizing and storing information. Instead of storing data in one place, like traditional databases, blockchain distributes data across many computers called nodes. Every node has a copy of the entire blockchain, which makes it secure and resistant to hacks and data loss.
To better understand the technology, imagine a chain of blocks. Each block contains some information, such as transaction or record data. The principle is simple. When a new block is created, it is automatically added to the previous block, forming a chain — hence the term “blockchain”.
Addresses
Let’s discuss addresses quickly. Each member of the network has a unique address, similar to a bank account number. A blockchain address is used to send and receive transactions or information.
Simply put, a blockchain transaction is an ordinary transaction, such as transferring crypto from one account to another, similar to a bank transfer. When you send a transaction to someone, you enter their address so they can receive your transaction. Similarly, when a transaction is sent to you, the sender enters your blockchain address.
The use of such addresses ensures privacy and security. All transactions are publicly available, but the information about the sender and receiver is encrypted. As a result, transaction participants can be sure that the privacy of their data is guaranteed.
A simple example of blockchain application is an e-voting system. Each voter has a unique address, and their vote is registered on the blockchain. The data are fully transparent and tamper-proof, but the identity of voters is secured.
The principles of blockchain operation, simply put
Blockchain is often compared to a book of accounts — it is referred to as a distributed ledger. Each block of the blockchain network is used for recording transaction data. This way, no information can get lost. Since all data are stored on multiple nodes, no one can tamper with blockchain records.
Each new block has to be verified by all validators. Each node stores its own copy of the network’s data. If discrepancies are discovered during the validation process, the transaction is rejected. This makes it nearly impossible to hack into a blockchain. The costs of tampering with all the copies would never pay off.
Where is the technology used?
Blockchain as a distributed ledger can be implemented wherever data storage is a requirement. A simple example is using blockchain for real estate transactions. Nowadays, in Russia, only the parties to a real estate transaction store information about it, while the information about the new owner is submitted to the Federal Service for State Registration, Cadastre and Cartography (Rosreestr). Such information is not easily available, so the buyer has to take the seller’s word for it. This makes real estate transactions quite risky — if one buys a problematic apartment, one can lose it if other people claim ownership. Recording every transaction on the blockchain would make it easier to track the history of real estate and protect buyers from fraud.
In the same way, one can store information about any goods, patents, etc. A simple record can help track publicly available data and guarantee their authenticity.
Conclusion
An understanding of blockchain’s role in crypto reveals its unlimited potential to change many areas of life, from finance to healthcare and public administration. This technology ensures security, transparency, and efficiency in data exchange and transactions.
Blockchain is more than just a buzzword, it is a powerful tool that can make our lives better.
