Blockchain: What Is It in Simple Words?

alien blockchain

The word “blockchain” has recently become very popular, many people have heard about it, but not everyone understands what it means. We will try to explain the following things in simple words within the framework of this article:

  • How blockchain works?
  • Why is this technology considered a miracle of the 21st century?
  • Where can it be applied?
  • What problems are still to be solved?

So, let’s discuss everything step-by-step.

Contents:
(please click the topic to scroll down to it)

  1. What is blockchain in simple words?
  2. What is the blockchain system and how does it work?
  3. Where can you apply the technology of blockchain?
  4. Pitfalls of blockchain
  5. Conclusion

 

1. What is blockchain in simple words?

Etymologically, a blockchain system is a clearly-sequenced chain of blocks constructed according to predetermined rules that contain certain information.

If we do not dive deep into cryptographic terms, then there is nothing complicated in the algorithm of the operation of the blockchain technology. For the sake of simplicity, the system of blockchain can be compared with the accounting journal, which is found in the possession of tens of thousands of users simultaneously. This journal is constantly updated and does this in all its copies, each page refers to the previous ones. In order to fool the system and fake at least one record, you will need a titanic amount of processing power, since you will have to replace all copies. Theoretically it is possible, but practically, one substitution will cost its organizers trillions of dollars, so we will consider it impossible.

2. What is the blockchain system and how does it work?

The blockchain platform is a large number of blocks that are constantly updated and linked. These blocks are distributed among all participants through peers (similar to torrent, which is used by millions of people to distribute and download files).

Each unit has its own individual hash sum. This is a timestamp, it can be compared with the biometric data of a person (retina, fingerprints, etc.). The blocks are connected with great precision into a certain chain. Attempts to change the sequence of blocks will not succeed. The system detects it immediately, because the hash sums will not correspond to the original registry. There are several methods of protection against such interference in the technology of blockchain:

  • PoW, Proof of Work.
  • PoS, Proof of Stake.

blockchain scheme

3. Where can you apply the technology of blockchain?

By and large, everything can be recorded in the blockchain.The scope of this technology is potentially much broader than just a payment network.There is a large number of blockchain projects, which are used in various spheres of life. For example, the UAE government decided to transfer 50% of the document circulation to blockchain until 2022. Using this technology, you can store any data. You can conduct voting, polls in blockchain. The issue of falsification disappears by itself.

Another unique feature, which was born together with Ethereum, is smart contracts. With their help, you can get rid of legal paperwork and intermediaries. There is a virtual notary (Stampery project) that certifies contracts through the technology of blockchain.

We already know of several working cases of how blockchain has been successfully applied in the field of copyright protection (the Ascribe project). If we start to list all the things which can benefit due to blockchain, we will have to write the third volume of “War and Peace.”

4. Pitfalls of blockchain

Like everything else in this world, blockchain has two sides of the coin. The first one, revolutionary and promising, has already been reviewed by us. It’s time to talk about the flaws and problems that are in the arsenal of this technology.

  • In order to implement the technology of blockchain everywhere, it is necessary to completely rebuild huge established systems that have a lot of interested parties, and they will hinder innovations in every way. You will need a couple of years to fully switch to blockchain.
  • This technology is not yet very friendly with regulators. In order for the broad masses to begin implementing it everywhere, the trust is required that is provided by the legislative framework. So far, there is no single scenario for solving this problem.
  • Miners use a lot of energy to confirm blockchain transactions. In the future, when the blockchain system is implemented in a large number of spheres, the powers to maintain it will have to be many times bigger.

5. Conclusion

The blockchain technology is unique and has a good technological support. It can store a large amount of data that can not be compromised, destroyed or replaced. The help of smart contract technology makes it possible for the agreements between two or more persons to happen without the presence of an intermediary, the algorithm itself will monitor the fulfillment of the obligations of all parties.

In the nearest future, blockchain has every chance to become a new paradigm for the mankind, but it is still necessary to do a lot of work and solve some problems to make it happen.

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Samsung Galaxy 10 Will Not Have an Inbuilt Crypto Wallet

After the South Korean electronic devices giant Samsung filed three patent applications for crypto and blockchain-related software, the rumours started that the company is planning to incorporate a cold crypto wallet in one of its main upcoming releases – Samsung Galaxy 10.

Samsung’s cryptocurrency service will essentially have two parts. A cold wallet for saving cryptocurrency and a crypto wallet for transfers,” claimed a Samsung news site.

Nevertheless, the official representatives of the company shared in a private talk with the Cointelegraph that the following news were no more than speculation and gossip. Thus, we can now be sure: although, Samsung is actually researching and probably planning to incorporate crypto and blockchain into its products, there will be no crypto wallet in the phone Galaxy 10.

We remind you:

Samsung Created a Blockchain Platform for Banks

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Facebook Is Once Again Looking for Blockchain Specialists

Being a social media giant, Facebook could not turn a blind eye to blockchain. It actually launched a whole department devoted to the research of this technology and was looking for a manager for this department some time ago.

However, none of the representatives of Facebook have revealed any detail as to what they are planning to do with blockchain, which caused a wave of rumors starting from the assumption that Facebook is going to release its own cryptocurrency to the one claiming that Facebook was working on a blockchain network, planning to outrun Ethereum.

The truth is still unclear, but the fact is: Facebook is definitely working on something. It has listed 5 vacancies for blockchain developers on its official site. Considering the fact that it is Facebook and also the rate of salaries for blockchain specialists, there surely will be a huge fight for these 5 jobs. We remind you:

Blockchain Specialists Receive the Highest Salary Among Software Developers

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SWIFT Created A New Payment System To Protect Blockchain and FinTechs Provided By Ripple, JP Morgan, and Transferwise

SWIFT has announced in its latest press-release that it decided to launch a new payment service – Global Payment Initiative (GPI), which is still in pilot version. The system is aimed at combating threats that bring harm to blockchain and other fintech solutions of such institutions like Ripple, JP Morgan, and Transferwise.

The main target of the pilot is “to build the foundation of a new integrated and interactive service that will significantly improve efficiencies in the payments process and which will ultimately be made available to all 10,000 banks across the SWIFT network.”

The GPI tests were conducted in October to try cross-border payments with banks in Thailand, China, Australia, and Singapore. The trial showed that using GPI-system payments could be carried out almost instantly.

According to SWIFT, the pilot GPI system starts working in the first half of 2019. It will cooperate with 15 financial institutions, including Bank of China, JP Morgan, CitiGroup and others. The service provides full transparency to payment beneficiaries and originators.

We remind you

What Is Happening Between Swift and Ripple and Why Does Ethereum Suffer From It?

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New Trend: Why Companies Replacing the Term “Blockchain” to “DLT”

Due to harmful hype to innovative chain of transaction blocks, some companies use “DLT” instead of “Blockchain”, which stands for Distributed Ledger Technology.

The term replacing begins with that some organisations, in their advertising and informational campaigns, decided to change the word “Blockchain” to “DLT”. Such a move connected with the hype about the blockchain technology. Therefore the companies, in order to take some of the negative from them,went on that kind of cunning. In this regard, an independent analytical company Forrester Research has made their own investigation.

Company analytics point out, that “Blockchain” is a trend-word of crypto industry, which many crypto projects abused. The word is used even when the technology isn’t used in the product. The usage of “Blockchain” for the hype invalidate the technology itself.  Since, the blockchain in general is associated with cryptocurrency, when the company which are not related to the world of cryptocurrency, decided to go away from the naming technology and started to use the word “DLT” , in order not to associate their activity with the digital money.

Meanwhile, the word “Blockchain” overtakes the word “Cryptocurrency” by frequency of requests in the world search, according to the Google Trends.

Source:Google Trends

We want to remind you:

The Number of Searches for “Bitcoin” in Google Has Skyrocketed

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Seven EU Member States United To Adopt Blockchain In Their Countries

Several European countries, namely France, Spain, Portugal, Italy, Cyprus, Greece and Malta, signed an agreement to promote and boost blockchain adoption in their regions. They argue the blockchain technology is able to strengthen their economics, as well as increase well-being of the population.

The declaration, signed on December 4, also anticipates collaboration on development of the technology, so that countries listed above become leading regions in this sector.

“We believe that Distributed Ledger Technologies could be one of the instruments that can help our countries [the Southern European Union countries] transform their economies and society into truly digital ones and become a leading region in this sector.”

From their point of view, blockchain may be used in different spheres, such as certifying product origin, education, transport, mobility, shipping, land registry, customs, company registry, and healthcare.

Malta’s parliamentary secretary for digital economy, Silvio Schembri, was extremely excited by this news, tweeting that he is “proud” to see Malta being a “leading role” on blockchain cooperation.

We remind you:

A New Blockchain Association To Be Launched By The European Commission

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How to Explain to Your Grandparents in 10 Minutes What is Bitcoin?

The older generation often perceive innovations as something supernatural and incredulous refer about them. But, what should you do, if you need to explain to your grandparents what is bitcoin, despite the fact they are afraid of picking up a mobile phone? 🙂
Of course we exaggerate! But since, the cryptocurrency little by little captures the world finance market, bursting into the life of those, who aren’t interested in it – your grandparents should be prepared.

For this The Coin Shark had developed a strategy, which will help you to explain what is Bitcoin in 10 minutes. During the experiment, none of the grandparents didn’t refuse to descend the legacy to their grandchildren 🙂

Stage #1: “Bitcoin – is like a paper money, but not made of paper”

Remember, never try to explain to older generation about the innovations on the developers slang. We recommend you to draw an analogy with the things which are more understandable for them.

It is better to compare Bitcoin with the ordinary money. Explain them, that it has the same value as the paper money, in which they receive the allowance. You can also buy goods and pay for services by using Bitcoin.

Do not forget to specify that the cryptocurrency are not made of paper, but encrypted by computer code. The ordinary money which we receive we can touch but the digital – not. Because they are stored on the computer, while the ordinary money in the wallet.

As far back as you can go that cryptocurrency is based on cryptographic methods, its management is decentralized and it works on the blockchain technology – your grandparents may think that you are possessed by a demon. All this stuff are clear only to our crypto space.

Stage #2: “Miners – are gold miners”

After the first stage is complete, it is logically that your grandparents will ask you – “how to get them?”

The old and proven method of the analogy also works here. We all know that we earn Bitcoin by mining. We associate it with a gold mining. And we clarify that while mining the cryptocurrency hoes,picks are not used, but a computer.

If you see understanding in the eyes of your beloved grandparents, than you can add, that Bitcoin can be bought on the internet. Specify, where and how is not necessary.

Stage #3: “Spend Bitcoin in the specialized store”

Before telling to your grandparents, where they can buy products by bitcoin, they need to know, that it has its own rate as well as the dollar. Except the rate depends on demand. Prepare sedative, because once they know the price for one BTC they will be very surprised. Only we are complaining here, that “Bitcoin is dying” , and it will be shock for them, that only one coin can cost 4 thousand dollars. I guess you realise that you should keep silence about the rate of 20 thousand dollars.

Now you can tell them : “Since Bitcoin – is unusual money, they are spent only in the special stores”.
Good job, the grandparents are ready! Now they can tell to their friends about Bitcoin. And if they are not afraid of computer, and they were interested in your story, than in the “For Beginners” section, they may find more about the cryptocurrency #1.   

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