Blockchain technology has received great attention in recent years and has taken a quantum leap in the world of digital economy, due to the protection it provides; As the information stored in this technology cannot be hacked or manipulated, through this article we will learn about this technology and its mechanism of action and its wide uses.
Blockchain: To store digital currencies away from hacking and counterfeiting
Blockchain (or blockchain) can be defined as a technology for storing and exchanging information in a decentralized manner; It prevents data tampering, hacking, or falsification, and is particularly prevalent in digital currencies and related technologies such as smart contracts and non-fungible tokens.
How does a blockchain work?
The basic working principle of blockchain is not to store data on a central server and distribute it to network members, but to create blocks or copies of a data set and make instant changes such as transfers in the case of cryptocurrencies.
What are the most important elements of a blockchain?
The blockchain network consists of several basic elements that can be explained as follows:
lumps
Each block contains information about an immediate change in data, and in the case of cryptocurrencies, each block contains, for example, the most recent transfers and immediate changes in user balances, along with other information to confirm validity. of the block.
fragmentation
It is a one-way encryption method, each block contains its own hash and the hash of the previous block to maintain the sequence of blocks. Hashes are generated through a mechanism adopted by each Blockchain called a “consensus mechanism”, and it has two basic types, which are the following:
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According to this mechanism, anyone who wants to create the new block and validate the transactions within it will have to spend a large amount of computing power to hash the block, and the number of attempts made by the computer is attached to the information base block; As proof that enough computing power has been expended to create it, which is the method adopted in Bitcoin and many other coins, a user performing this task is usually paid salaries in the form of new coins created with each new block, transfer fees in the new block, or both.
proof of stake
This mechanism has the participation of those who have a minimum number of shares of the currency or virtual assets that are being traded to certify the new blocks, and the participants in the process are chosen randomly, and this mechanism is linked to "staking". . ”. Which means that users are freezing a part of their cryptocurrency to be used to create and profit from new blocks.
Blockchain uses in various fields
The uses of the blockchain are many, and are as follows:
cryptocurrency
Blockchain technology is the main factor for the existence of digital currencies today, that is, this technology has been relied on since the creation of Bitcoin, which is the first digital currency, and by relying on it many benefits are achieved, such as: without the need for an intermediary or central authority to manage payments and transfers, and great security It is characterized by the difficulty of penetration, preventing the withdrawal of the same balance more than once, or what is known as duplication of spending .
smart contracts
It is defined as a type of self-executing token that allows contracts between two parties without being forced to implement them by an intermediary, and is the main factor for the emergence of many new Blockchain applications, such as: Blockchain-based and decentralized applications. games.
decentralized applications
They are defined as applications that work according to the rules set for them on the blockchain, do not need a central server like normal applications, and are not subject to change after being uploaded to the blockchain.
Essential Icons
It is a method that allows the registration and commercialization of the ownership of files and digital works without the need for a central authority to recognize the ownership of these assets by the parties.
What are the pros of blockchain?
Blockchain technology has many advantages that make it attractive for various applications as an alternative to traditional centralized methods, the most important of which are the following:
safety
In the absence of a central server, the blockchain is almost impossible to cripple, and mining operations make the amount of computing power needed to hack it so high that no feasible hacking attempt outperforms the entire network in the amount of computing power. .
Low costs
Relying on the blockchain reduces many expenses related to data protection, management, and storage.
decentralized structure
It provides a new way to deliver content, software, and financial transactions so you don't need to rely on large companies, and makes it easy to achieve transparency and speed across multiple transactions.
What are the disadvantages of blockchain?
Blockchain technology, despite its advantages and benefits, has been the subject of much criticism focused on several key ideas, including the following:
Environment The use of blockchain technology, especially in digital currencies, requires large amounts of energy, especially for the mining process, leading mining companies to turn to countries with low energy prices, which often depend on fossil fuels with high carbon emissions, in addition to the waste they generate. electronic.
inability to edit
When the Blockchain rules are issued, none of its transactions can be modified or reversed, making it difficult to fix loopholes in the way the Blockchain is designed and programmed, or the smart contracts built on it.
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