The question “What is a blockchain?” has become One of the most popular search titles on the Google search engine (google) in recent years. Many curious people search for titles like “Blockchain for Beginners” for “Blockchain Training Courses,” or “Introducing Blockchain” for someone else’s explanation of Blockchain.
So, what is blockchain technology?
We may simply say that the blockchain, which is known in Arabic as “block chain” is the data that is stored and maintained through a decentralized network of computers.
This unreliable technology could fundamentally change the current world as we know it by redefining how we handle information and convey values. For example, blockchain enables us to transfer digital money peer-to-peer without going through banks. This technology reduces the need for an intermediary in many traditional sectors, such as: banking, insurance, entertainment, government, and others. Although blockchain is in its early stages of development, this technology has already begun to be used in real life in cryptocurrencies, government data storage, and other areas. Possible possibilities for its use in the public and private sectors are also studied.
One of the most famous blockchains known to this day is the one used in the cryptocurrency “Bitcoin”.
How it works?
The concept of blockchain technology has been discussed in many books, but let’s take a look at the basic concepts of this technology, taking Bitcoin for example:
Blockchain technology records information related to Bitcoin transactions, such as the source of this money, the destination it was sent to, the timing of the transaction, its value, the fees paid in it, and all information related to this transaction. All this information is stored in a series of “blocks”, which are somewhat similar to a bowl. In the case of Bitcoin, each block contains data stored for 2,000 transactions (at least until late 2017). Process blocks are connected with cipher auxiliary links.
Blockchain can store various types of data, such as: details of cryptocurrency operations, contents of the land registry, insurance records, health history, car accident history, title changes, and more. It can also act as a platform for other applications.
Blockchains, which function as distributed ledgers with specific timestamps of transactions, are stored (in most cases) through decentralized networks of computers, also called “nodes,” with each computer storing an entire Blockchain.
The Blockchain is not modifiable, as any change to it requires enormous computing power, and the Blockchain becomes more secure the more ancient it is.
The Blockchain is somewhat transparent, as anyone can see the data stored in the Blockchain (Bitcoin for example) around which all transactions can be viewed using the Blockchain browser. However, some blockchain technologies offer more anonymity.
Blockchain tends to be decentralized, as there is no central authority to control it unlike traditional databases that can be blocked and monitored by their owner. The blockchain can maintain its functionality 24/7 in the event of any malfunction in the network. However, there are trends for more centralized blockchain projects.
All of these features give hope to transform our daily routine procedures into more efficient, transparent, faster and less costly procedures.
Types of Blockchain:
There are two types of Blockchain :
Public, (such as Bitcoin), where anyone can join the network of nodes.
Private, (used mostly by companies), where only people with permission can add their own devices to the network.
What is blockchain technology and what is it based on?
Blockchain is a technology for storing, validating and licensing digital transactions on the Internet with a high degree of security and a degree of encryption that may be impossible to break in light of the technologies available today.
Many researchers and experts assert that blockchain technology will be the gateway to a great world of innovations in the internet space and in destabilizing and changing the methods of business sectors in a way that many companies around the world may disappear as money transfer companies unless they ride the wave and adapt their business to new technologies.
The traditional business management method relies on centralization in most cases and the inevitability of a third party in any transaction that authorizes the transaction or ensures its occurrence. For example, banks are the ones who control the money transfer sector for a set fee. For example, in this case, the bank is the one who plays the role of the third party in the transaction to ensure its occurrence and the transfer of funds from the sender to the sender.
In short, the blockchain can be considered a new type of database. Instead of the databases being centralized in the third party and stored in one server or several servers managed by the third party, the blockchain databases are all frequently stored in all connected devices that deal with each other. Some or in the devices of people interacting with each other who use these databases stored in their devices repeatedly to verify the validity of any transaction.
Features of blockchain technology:
- You do not need any centralization or a third party to process the transaction
- There is no party that approves or rejects the transaction if you are authorized to conduct it
- The strength of the system is in the extent of its encryption and decentralization
Possible applications of the blockchain:
Financial transactions: For example, electronic currencies such as Bitcoin, stocks, and money transfers
Supply Chain: Blockchain technology can keep the history of any product or shipment from origin and even the buyer in a secure, reliable and encrypted manner that cannot be tampered with.
And in many areas such as keeping passwords, credit rating, issuing driver’s licenses, marriage certificates, and managing property and assets.
To this day, there is a reservation on the use of blockchain technology because it may cause changes in regulations and laws and may lead to the dispensation of many companies and governmental and private institutions.
What hinders the application of blockchain technology?
- Most people and workers in technical and service institutions do not know what blockchain technology is, but if they knew it, their knowledge of it is simple and devoid of details and no more than their knowledge of Bitcoin
- The novelty of this technology, which takes time to mature, and its applications vary.
- Data management in a decentralized environment
- There are no international standards and standards for this technology
- Regulatory Acceptance: It simply needs a radical change in procedures, laws and policies.
There is no doubt that blockchain is a very powerful technology. It provides a consensus layer that organizes and records events. Such infrastructure gives us users and even governments the potential power to build decentralized economies. Surprisingly, the encryption needed to operate a simple blockchain can only rely on digital signatures. In the field of blockchain, private keys represent identities while signatures are a public statement or claim made by an identity. Blockchain requests and validates data according to a set of rules which among many other things ensure that signatures are tamper-proof and valid.
The modern cryptographic toolbox includes some great magic tricks unlike the more classic cryptography used in the blockchain. Some examples of these tricks are zero-knowledge proofs, symmetric cryptography, and multilateral arithmetic. As we have seen over the past decade, blockchain research has pushed applied cryptography dramatically with surprising advances in recent knowledge in all of the above and much more.