In connection with the active introduction of virtual cryptocurrencies, which has been observed in recent months, a lot of transaction systems, auxiliary platforms, etc. appear. Quite often there are references to the database of transactions on the Internet, but not all users understand what is being said. In this article, we will look at the concept of blockchain technology, what is it in simple words, and how does it work?

Linking blockchain with bitcoin

Blockchain, Bitcoin and other cryptocurrencies: what is it, what are the differences? Blockchain and cryptocurrency technologies and fundamentals are inextricably linked, since they interact in a complex. Therefore, speaking about blockchain, answering the question of what it is and how to use it, one cannot but mention crypto currencies.

Cryptocurrencies are virtual money produced by spending hardware power or combining them in the form of devices of all users. What is and how does the network, blockchain technology and cryptocurrency work?

Production capacity is spent on maintaining the system. After collecting the data block, they are signed, and the user is credited with virtual money. Blockchain technology is needed to carry out transactions in this area.

The most famous unit of cryptocurrency is Bitcoin. And although the use of blockchain technology may seem overkill, since often we are talking about very small amounts, it is necessary. After all, crypto currencies are gaining stable positions. Now they are used not only in online casinos and for payments in online games, but also exchanged for real money. This is a technology whose future is undeniable.

What is blockchain in simple terms?

What is blockchain in plain language? From a technical point of view, this is a system for organizing transactions, building a clearly structured chain of funds transfers, applicable to cryptocurrency. Blockchain technology has a core distinctive feature- complete transparency of the scheme of transactions and transfers at all stages of their implementation. Thanks to the transparent approach, blockchain is a platform with the maximum level of security and protection of all transfers, while without compromising the degree of confidentiality.

Blockchain technology - the meaning of the term if translated into Russian, then it consists of two words Block and Chain and is accurately translated as "block chain". This is the essence of blockchain technology for cryptocurrencies.

Even from simple description algorithm, its advantages are clear:

  1. High transaction security;
  2. Transparency of transfers and movements of funds;
  3. Maintaining anonymity with full access to all stored information.

Who needs blockchain and why? It is necessary, first of all, for the users of cryptocurrencies and miners (those who mine them), since it provides security, and their funds.

Blockchain resembles a bank for a crypt in terms of its goals. It is also described in simple words, for example, as a transparent safe, where all users deposit funds. But they can only take the part to which their private key gives them access.

Features of blockchain technology

A system or blockchain is an ordered database that stores all information on all computers interacting with the network. The database constantly stores a list of signed blocks with a time stamp, a link to the previous block and other necessary data. The mining never stops and the block list is constantly growing.

Blockchain technologies and projects are a convenient and promising system. However, they do not exist for all types of cryptocurrency (there are many of them and are constantly growing). But, for example, there is a blockchain for bitcoin. Therefore, many users are now interested in how to make a blockchain project, how to start, etc.

Blockchain: what kind of technology and what advantages does it have? An important plus is that it is thanks to the system that instant data synchronization is achieved between all users of the project. The network's transaction database on the Internet is stored simultaneously on all PCs of miners working with bitcoins.

Blockchain technology and why is it needed? A close analogy is the patient's medical history. It records entries with date and time notes, and retroactive entries are not possible. Keys for access to blocks of information - records are available only for the doctor and the patient. All blocks in the history can be accessed only by those to whom the doctor or patient will provide their keys.

Writing blocks in the system

How are blocks entered into the blockchain, how does it work? As soon as a block of data is created, it tries to join the network. Because the registry itself, in fact, is stored simultaneously on the devices of a large number of users, it is checked by all these computers. If no block failures are found, then it is written to the block-transaction chain. And from that time on, it is impossible to make changes to it. By the way, it is at this stage that the phenomenon of block loss occurs most often, when the block earned by the participants-miners does not receive a signature and is not paid.

After making a change (adding a new block), the database is automatically updated on all devices connected to it.

What is blockchain from the point of view of a participant-miner? This is a system for recording and accounting for the signed blocks of all users of the project, which is most convenient for use on platforms and mining farms, when several users combine the power of their devices to make money.

Who created the blockchain?

Blockchain technology was first proposed in 2008 by Satoshi Nakamoto. It took about 10 months for its technical support and implementation. And in 2009, it was first applied in the form now known. In the bitcoin system, the blockchain is a single register of information and data. Bitcoin became the first cryptocurrency to solve the problem of cost overruns by duplicating a file, where one block could be copied and spent two or three times.

At the same time, the creator provided an approach without involving an authoritative body, and without storing all information on one physical server. This could compromise the security of each participant-miner.

System security

It has been repeatedly noted above that blockchain transfers (transactions) are highly secure. What is it based on? Initially, at the stage of project creation, security at the database level was incorporated into it, and carried out according to the same principle.

Transparency is guaranteed by the use of a universal and modern system encryption. That is, each project user or participant can change only that part of the chain to which he has a special key. Without this key, writing a new block signed by the user to the system is impossible.

If we consider the concept of blockchain in detail, it becomes clear that the whole principle of its operation is in the absence of a central server. Decentralized servers help time stamping. But the very storage, replenishment and maintenance of the registry is provided by peer-to-peer networks.

The approach allows you to authenticate the source, manage identity, easily log and update events, etc.

Bitcoin is a cryptocurrency that is credited after processing block data by means of hardware capacities. Blockchain is an autonomous database of information (register) that records all these blocks, and, accordingly, the accruals of bitcoins.

The user, by transferring his key to third parties, actually provides them with access to the funds received by him for the blocks. It is impossible to somehow influence the blocks of other users using a private key.

What is blockchain for?

What is blockchain for, and what does blockchain mean in terms of money rotation and cryptocurrency participation in this? Strictly speaking, using the method allows participants to get rid of intermediate processes when transferring funds, integrating with banks, etc. Considering blockchain, the definition itself makes it clear that the platform can perform three main banking functions:

  1. Registration of transactions;
  2. Conclusion of contracts;
  3. Confirmation of the user's identity at the stage of his identification.

It is quite appropriate to compare blockchain platforms with banks for cryptocurrency. Because in conditions of capitalization, the sphere of circulation of funds is constantly growing. The transfer of some part of it to this platform, although it will lead to the severing of many financial ties, at the same time will significantly increase the efficiency of the services provided.

How to use blockchain outside of banking? This technology is quite versatile, in particular, it can be used not only for storing blocks and data on them (time), but also for storing any other computer code. That is, the code is programmed to automatic execution only when two parties to the transaction use their keys (sign a contract). In addition, specific indicators or parameters are set. When they occur, the deal will be signed automatically. These can be changes in indicators on the exchange, weather forecasts, and anything else.

How do intellectual property owners work in the blockchain? In this area, the system helps to protect property, since it can determine how many times a particular network participant has the right to have access to the necessary content (view it, download it, etc.).

The advantages, capabilities and disadvantages of blockchain are relative. For example, the speed of its work is rather low in some projects and it has not yet been implemented globally. But the high level of security "outweighs" these disadvantages. Because the attitude to this way rather ambiguous.

Blockchain platform creation

Where to start and which platform to choose? How to create a project and work on a blockchain platform? At the initial stages, it is necessary to carefully study the conditions, structure, types and theory of the blockchain. If you are sure that possible shortcomings do not bother you, then use one of the platforms to create a business application:

  1. EmcSSH. This platform views the system as a global key database for providing access rights to data and materials. These keys are quickly replaced. The method is suitable for organizing the operation of a large number of servers, computers, ATMs, etc. The user can get his access key at all terminals;
  2. EmcSSL. Another blockchain platform, what is it in this case? It is a single database for storing signatures, certificates and digital fingerprints of users and companies. When authorizing a user in the system, authentication is carried out on the basis of these data;
  3. Emc InfoCard - a space for using information business cards in electronic form in conjunction with SSL user certificates;
  4. EmcTTS - a system for recording, posting and publishing documents with access to them by a private key;
  5. Emc DPO - the basis of the system for proving and securing copyright or property rights to material and creative assets;
  6. Atom Atom Emc is used to create and sign contracts without intermediaries and any involvement of third parties;
  7. Emc DNS - a service for organizing and issuing domain names, and assigning them to users;
    Ethereum - everyone who has heard about the blockchain knows about this platform. It is very versatile, but difficult to work with.

Depending on what goals the creation of the system pursues, the most convenient and tailored service is selected.

Examples of blockchain projects

In addition to the actual transfer of cryptocurrency to the wallet, this platform is used in a different way. For example, blockchain is used in the following areas:

  1. Storing information and data in the Cloud;
  2. Personal identification and authorization in the system and in the network;
  3. Verification of materials and information;
  4. Automatic generation and signing of contracts;
  5. Evidentiary processes;
  6. Notarial services;
  7. Renting out property;
  8. Online voting;
  9. Plying information in the media and the Internet;
  10. Use in the field of insurance and more.

The wide application of the approach makes it possible to secure many processes and make them simpler.

Investing in blockchain

The essence of blockchain technology and cryptocurrency is described above. It is clear from this that this industry is very promising, successful, and is developing rapidly. Therefore, some users are interested in investing in such projects.

Several companies are developing in this direction. The investor can invest his funds in them.

  • The first option is independent trading on the exchange, which requires time, effort, and analytical skills. It is necessary to predict the behavior of the market on your own or use the paid services of companies conducting such an analysis;
  • Trust management of assets is carried out through mutual funds, but it is not very common in Russia. The most famous is the Rubus Fund;
  • Large holdings. One of the largest and most stable exchange holdings working with cryptocurrency and blockchain is ICN Holding. He is able to provide his clients with income up to 20% per year.

Blockchain is a promising technology of the future, which holds a stable position due to a number of advantages. However, before engaging in such an investment, it is worthwhile to understand the blockchain technology in detail.

Do you think there is a future for blockchain technology? And how quickly will it enter everyday life? Write about it in the comments to the article.

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At its peak, 1 bitcoin is worth more than 1 million rubles. It skyrocketed by December 2017 and then collapsed as well. The word "blockchain" is still surrounded by hysteria: companies that simply wrote it in their name soar in price by 400%. Half of Russians would like to receive a cryptocurrency as a gift for New Year, while bitcoin is called "the largest bubble in the history of mankind." A dozen new terms, some fascinate with innovation, others - frightening, resembling a scam. The village simple language explains why bitcoin and blockchain are not the same, how technology will make the world transparent and who will benefit from it.

What is blockchain in general, on the fingers

Explain to me what is the point of blockchain?

Imagine an amusement park. At the entrance, everyone is given tape recorders, and they are constantly included for recording. You can buy cotton candy and a roller coaster ride here for tokens, but no one gives you them. Suddenly you hear the seller shout: "Vasya gave Oleg four tokens!", "Lesha gave Anna 100 tokens!" - and so on, without stopping. Every time someone exchanges money for tokens or pays with them, the seller yells about it to the whole crowd. The dictaphones of everyone in the park are recording this cry. If you finally want to pay with tokens, the seller will start comparing your dictaphone records with him. This is the key point of the park's safety: you cannot suddenly "invent" a couple of extra tokens for yourself: the scam will quickly open up, because no one’s dictaphone record will have a shout from the seller who would have handed these two tokens to you earlier. Physically, no one at all has the tokens themselves, even the owners of the park: they are not needed as an object, because any visitor has a history of all programs.

The tape of any dictaphone in the crowd with the same screaming recording is the blockchain, a kind of replicated universal diary. If such a park were real, it would take sellers a long time to compare the films with each other. But in the digital version, the blockchain is fast and safe, because the Internet speed is now high, the processors are powerful, and data can be transferred in large volumes. The main benefit of blockchain is decentralization. Each has a duplicate history of all transactions, as it would be if everyone collected paper checks on their account transactions, and then posted them on the Internet. Then neither you, nor the owner of the amusement park, nor the sellers can deceive.

I understood the analogy. How does the real blockchain work?

Any data transmission system requires the actual transmitters themselves and their special language. In analogy with a park, these are voice recorders and magnetic tape. Blockchain is the name of an endless list in which, like on a dictaphone tape, transmissions of information from one person to another are recorded, and each of them owns a copy of the general list. There are many different blockchains. It's like an internal combustion engine. The principle of operation is the same, but the incarnations and the fuel are different: the locomotive runs on a diesel engine, the Formula 1 race cars run on gasoline. The rules for maintaining the blockchain are set by programmers who write the code of the client program (create a dictaphone) through which information will be exchanged. If you want to connect to one of the already working systems, then together with the client program you download the entire blockchain or the "fresh" part of this register of transfers (for example, the blockchain of the bitcoin cryptocurrency (BTC) now weighs more than 170 gigabytes). Each line in it is a record that some information has passed from one addressee to another. The main transfer rule does not change: do you want to send a digital token from A to B? First, you need to prove that someone passed this token to you in the past.

Blockchain- history of all transmissions of information in a preprogrammed system. Moreover, this story is completely duplicated for each participant in the system. Cryptocurrencies are just a special case of blockchain application, where programmers decided that the unit of information for transfer would be a "coin".

Sometimes the blockchain as a whole is called the circle of technologies that are associated with the use of such "distributed ledgers".

Wait, where are my tokens stored on the blockchain?

Nowhere. In the blockchain itself, there are no wallets or accounts, like in a bank: there is no information at all, except for the open history of transfers. You only own the key from your "previous" transaction, which says where your "tokens" came from and how many. The Private key is your only proof of ownership of the tokens mentioned in the blockchain. It is usually a hexadecimal number — a set of random numbers and letters that is generated by a computer (so the “mother’s maiden name” option will not work here). Only by presenting this key at a new deal, you can transfer tokens to another. By the way, in most cryptocurrencies, the entire blockchain can be viewed even manually: Bitcoin, for example, has convenient browser sites.

It is important to understand that if you lose your private key, you will also lose tokens and no one else will be able to use them. It is impossible to "pick" an encrypted private key: it will take more time to iterate through all the options than the Universe exists. That is why the American James Howells from the already famous history has been trying for several years to find in a landfill HDD with keys from 7.5 thousand bitcoins (at the peak rate, it cost about 7 billion rubles). Remark about secrecy: if all transfers can be tracked, this does not mean that all your names and appearances are recorded in the blockchain. The sender and recipient can also be encrypted in the form of random numbers (blockchain addresses), which will also change with each transaction - then the network becomes completely anonymous.

There are no wallets or accounts in the blockchain itself, like in a bank.
You only own the key to the translation, which says where the tokens came from

Why can't the blockchain be hacked? It is publicly available.

Remember the amusement park seller who compares your dictaphone tapes to him for identity? In the digital blockchain, this task is performed by computers of miners (from English mining - extraction of minerals). It is the miners who collect transactions into "blocks", which are then added to the blockchain. To understand how miners are protecting the blockchain, we will have to draw another pictorial analogy. If you find it odd, remember that this is a technology that pays millions of dollars for.

There is constant competition in the crowd of miners connected to the system. Imagine that in some cafe behind the counter there are ten bartenders with their mixers: they compete in who will be the first to make a cocktail of fruits and berries - a smoothie. They do not choose the composition of the smoothie, their task is simply to hold the buttons on the mixers. Whoever was the first to mix fruits and berries to the desired consistency won - he gives the glass to the guest. The skills of the bartender do not play a big role here, it is only important how powerful his mixer is. The guests of the establishment do not want the smoothie recipe to be violated, so the villainous bartender will be the one who adds a new ingredient to the original composition. But he will not be able to do this imperceptibly. First, guests can easily sense that the taste has changed. Secondly, the villain needs to have the most powerful mixer of all and turn the shenanigans faster than any other bartender. And this will be almost impossible if several bartenders decide to join forces to quickly collect one glass of smoothies from several small portions, which each interfere with separately.

Miners- special participants in the blockchain system. Their computers are configured to check the translations of other participants. The check itself is the solution of a simple mathematical problem in a fixed time. In many cryptocurrencies, miners are rewarded for this work in the form of new coins (PoW emission mechanism). But this is not necessary for blockchain! There are also other ways of issuing.


A glass of smoothies is a block in the blockchain. Translations are cherries, grapes and banana pieces. Each transfer has a unique number. When added together, these numbers form the block name. This process of addition is called "hashing", and it is on this process that thousands of miner's computers are connected to the system all over the planet. They mix the numbers of all transactions to get the block hash, that is, the taste of a smoothie. Whoever received the hash sum first adds a new block to the blockchain. Then his work is rechecked by several more miners, and the block is considered "valid", that is, confirmed. If suddenly some miner wants to add a non-existent transfer to the block, the "hash" of his block will be different, just as the taste of the smoothie is different, into which something has been mixed.

This is why everyone loves blockchain so much: the more participants, the higher the security. Together with new transactions, miners also add up the hash sum (that is, the name) of the previous block, so it will not work to falsify an old block either - through this simple trick, all the blocks are interconnected. A caveat should be made here: technically, the process of calculating a hash is a slightly more complex mathematical operation, but we have explained its properties and effect.

Okay, but I still don't understand who is issuing the new tokens?

It depends on the rules of the particular system. Let's not forget that blockchain is just a technology for organizing data. If the tokens recorded in the blockchain play the role of money, the system is called "cryptocurrency". Now, in most cryptocurrencies, new coins automatically appear just at the miners who have written the next block in the blockchain: the system automatically compensates them for the time and electricity costs. This principle is called PoW - proof of work. Miners can also receive a microscopic commission from each transfer. Thanks to this, cryptocurrencies do not need central banks - responsibility and work are separated, and no one can print themselves a little money, because the speed of issuing new tokens that are distributed to miners is fixed in the cryptocurrency code, it cannot be changed. The degree of control here can also be determined only statistically: for example, most bitcoin miners are in China, but there is no such polarization. By the way, in June the Moscow cryptocurrency miner The Village about his work and earnings.

Mining is only one of the emission options, that is, the release of new coins. Such rules are laid down in the source code of bitcoin and several other cryptocurrencies by their creators. In, where other people wrote the code, the role of miners, for example, can be performed by those users who have the most coins on blockchain addresses. That is, those who are "richer" add new blocks to the blockchain. They are called "forgers", and such a system is PoS (proof of stake). They receive a reward for "forging" in proportion to the number of their coins - almost like the interest that drips onto the deposit. You can read about other blockchain protection mechanisms, for example,. There are systems where new "tokens" do not appear at all: they were released limitedly at the start of the system, distributed among the participants, and then only transferred to each other. This is convenient if your blockchain is not a currency, but, for example, a register of land rights or some kind of licenses.

Block- several lines of the blockchain, collected in a group. Each line is a separate translation, which has a number.

Each block has a "name" or "hash". It contains all the translation numbers of this block, as well as the hash of the previous block. Thus, all blocks are linked, and the hash of each block is unique. The process of computing a hash is called "hashing" and is the responsibility of the miners.

Usually a block has a fixed "weight" in megabytes.

Mining pools- combining several miners into a group in order to calculate the hash of one block together, and divide the reward equally.

The information that A transmitted to B through the blockchain can also be a "coin"
and "license", and "signature", and other value of the company

Why blockchain is called a revolution

What does “blockchain is not a currency” mean? And what else can he be?

“Blockchain is to bitcoin what the internet is to email,” explains Financial Times columnist Sally Davis. - This is a big electronic system where you can create applications. Currency is one such application. " The information itself, which A transmitted to B through the blockchain, can be a "coin" (that is, used as currency), or a "signature", and a "license" or some other internal value of the company. It depends on the area in which the technology is being applied. For example, the American service Blinded allows photographers to transfer copyrights to images through the blockchain, and the blockchain of the Austrian startup Ascribe protects the rights of artists to paintings and drawings. In both cases, as an author, you first need to digitize your work and upload it to the system. Suppose a magazine now wants to print your photo. You conclude a deal through the blockchain - cryptocurrency coins are sent to you, and you send a copy of the snapshot. Now the journal will have a private key to the translation, with which it can always prove the legality of the publication. And whoever does not have the key has stolen the picture.

Similarly, in another startup, London-based Everledger, the unit of information is the exact passport of a diamond, which encrypts 40 parameters of the stone. Different owners send this passport to each other via the blockchain when they are resold. Each new owner has a private key to the last shipment of the passport. If someone tries to sell a stolen diamond, the buyer can check it through Everledger by driving a few parameters into the service. If the stone is found on the blockchain, the seller will have to present the private key. Whoever does not have the key has stolen the stone. In September, Everledger had 1.6 million registered gems worldwide. Estonia, for example, decided to implement the new technology on a larger scale: in 2016, Guardtime, commissioned by the Estonian government, began to transfer the medical records of one million of the country's patients to a blockchain-based system.

What's in the blockchain breakthrough?

The most important effect: values ​​within the blockchain are transmitted directly, over any distance - and banks or other "trusted hands" are not needed for this. In the grotesque 2006 film "Hottabych" by Pyotr Tochilin there is scene when an IT specialist makes fun of the extortionist, claiming that he sent him money "by email". In 2017, the joke is no longer relevant: the private key of any cryptographic property can now indeed be sent even by e-mail... “If you are Gazprom, then you have a thousand drivers on your staff who carry things all over Russia,” explains crypto enthusiast Vladimir Smerkis, founder of The Token Fund. - You issue a thousand powers of attorney a day. They need to be signed by Tatyana Mikhailovna, then Nadezhda Petrovna, then San Sanych, although you can simply write it into the corporate blockchain: "CEO Sergei Palych gave the thing to Arsen" - that's the whole document flow. " The chain of transfers will continue further - from Arsen to the new owner of the thing and further, and the blockchain will preserve history.

No powers of attorney can be forged, and this greatly simplifies the state apparatus. For example, cadastral registration in Georgia was already transferred to blockchain last year. How it works, says Vladimir Smerkis: “Let's imagine that a lonely grandmother has been living on Rublevka for ten years. Then she dies, and the grandchildren do not know about it. A certain person comes to the official, gives him a bribe, the official rewrites the grandmother's paper power of attorney - that's it, the land has changed its owner. The Georgian real estate register on the blockchain is not an experiment; more than 100 thousand documents have already been issued through it. If you sold an apartment to your friend on Rustaveli Avenue in Tbilisi, the power of attorney for it will be transferred from one addressee to another directly, and it will be impossible to forge it. " In addition to Georgia, Sweden, Ghana and even Honduras have already modernized the real estate register, and Ukraine has decided to introduce the technology on a large scale, in the entire government.

Why is it said that blockchain will kill bureaucracy, and what are smart contracts?

“When programmers come to power, entire ministries will be replaced with a small script,” - in 2011, this phrase of the user “Habrahabr” spread across the Web. It is now clear that the role of the abstract "script" will be played by the blockchain. People have long dreamed of replacing the paperwork of officials with automation: it will be faster, cheaper, and at the same time the human factor will disappear. In 2013, Russian-Canadian programmer Vitalik Buterin invented Ethereum, and a year later Microsoft, IBM, Lufthansa, the legendary American bank JPMorgan Chase and many others wanted to cooperate with it. Ethereum is another cryptocurrency like bitcoin, only better. In addition to manipulating your coins - "ether" (ETH), the Ethereum code allows you to program transactions that will be "executed" automatically when the conditions specified by the programmer are met. It's like teaching a coin to go to a new owner at the right time. These deals are called “smart contracts,” and they are similar to postponed posts on social media.

For example, if you conclude a smart contract with an insurance company for life insurance, then your relatives will be paid automatically when a certificate of your death appears in the registry office (if the registry office has, for example, a website). There are also market examples on a small scale: the French service Fizzy, through smart contracts, insures flights against delays longer than two hours. The airline simply will not be able not to pay money in the form of cryptocurrency: if all its insurance contacts are recorded in the blockchain, then it is impossible to falsify their conditions. The simplest example of an algorithm in government is an auction. If you teach a smart contract to quickly compare public procurement bids and choose a winner, people-evaluators in tender committees will simply be unnecessary. Unless a smart contract should be drawn up by a “smart lawyer”. The vacancies of such developers on Headhunter are now estimated at 200-400 thousand rubles.

How to implement a blockchain somewhere using tokens and ICOs?

Usually, in order to teach a company or a government agency to work with a new technology, outside specialists are involved. To "implement" the blockchain, programmers need to write the code of a new system individually for each customer's task, be it government procurement, product trade, or presidential elections. Companies that use blockchain can be divided into three groups - depending on how "hysterical" they are implementing it.

Smart contracts- programmable pending transactions, the transfer of which will occur automatically when one of the parties confirms the fulfillment of the conditions. Cryptocurrency smart contracts were invented by Vitalik Buterin, founder of the Ethereum blockchain platform and Ethereum cryptocurrency, the person of 2017 according to Bloomberg.

When voting day comes, the person sends their token
to a special account of Sobchak, Putin or Zyuganov

The former actually use blockchain regularly to transfer or store important corporate data. For this, the company issues a lot of "tokens" - this is a synonym for "token" in the blockchain. Some value is assigned to the token. The powers of attorney in the example of Vladimir Smerkis about Gazprom are also tokens. Another real-world example: tokens in the Dutch Dentacoin system, which users receive every time they leave a review of a private dental clinic about its services. This information is important for both clients and investors of the clinic. Then, with these tokens, you can, for example, pay for an operation in other clinics from the system. Tokens here are part of the infrastructure. According to the same principle, elections can be transferred to the blockchain, says Smerkis, founder of The Token Box: “The simplest thing is that at birth each citizen is given one voting token. When voting day comes, the person (if he is an adult) sends his token to a special account of Sobchak, Putin or Zyuganov. All statistics are open, all transfers can be tracked, it will not be possible to artificially multiply votes. Everything is transparent. "

Anyone can issue their tokens. The already mentioned blockchain platform Ethereum was the first to provide such an opportunity to everyone. Why create small, unreliable blockchains when you can tie your new coins directly to the ancient and huge blockchain of Ether (ETH)? Physically, it happens like this: your token system is created by a programmer "on top" of the ether blockchain - as if you and a friend decided to use colored lighters instead of figures on a chessboard. This means that the new system, a kind of "superstructure", needs a sum of several ether coins so that tokens can be transferred to someone else. This “shadow” technical amount of coins is called “gas”. It is like fuel in a gasoline engine, and tokens are the wheels of a car. The minimum gas volume for tokens on Ethereum is one ether. In general, "gas" is called the fuel for any smart contract, because the issuance of tokens is also programmed with their help.

Despite the availability of technology, developers who are able to implement and customize blockchain for other companies can now be counted on one hand. Among the most notable: the American-Georgian BitFury, the already mentioned Guardtime in Estonia, of course, the Ethereum Foundation, as well as the Russian designer of blockchain projects Waves Platform Alexandra Ivanova with her eponymous cryptocurrency. According to the former vice-president of VKontakte, Ilya Perekopsky (founder of Blackmoon Crypto, another Russian platform for tokenization of businesses), a full package of work to create an "exclusive" blockchain costs at least $ 1-3 million.

Token is a unit of information for transmission through the blockchain, which corresponds to some value. Coins in cryptocurrencies are a particular example of a token.

Tokenization- the process of introducing blockchain into any company, business or government. structure. To do this, programmers create a separate blockchain for a specific task of the customer. A kilogram of ore, a stool, a travel ticket, and a vote in an election can become a token, depending on who decides to use the blockchain and what it will be needed for.

Gas- this is the name of the cryptocurrency coins that are needed by the add-on blockchain systems for processing tokens. That is, for companies that have implemented a blockchain using the Ethereum code, ether is fuel, "gas", without which tokens will not be transferred.

Physically, it happens like this: your token system is created by a programmer "on top" of the ether blockchain - as if, instead of figures on a chessboard, you and your friend decided to use colored lighters

Other startups are issuing their tokens in order to raise money from a wide range of people who like a certain innovative idea. In fact, this is a classic crowdfunding, only it is called ICO (Initial Coin Offering). These tokens are also distributed through the blockchain, but they may not participate in the work of the company itself. Typically, one token during the ICO corresponds to a unit of the product that the company promises to release if the business is working to its fullest. On the appointed day, the ICO opens, and people buy a limited number of company tokens for other cryptocurrencies, for example, for bitcoins or ether. Then the depositors will be able to return the money by selling their tokens back to the company, or even make money on the resale - often the tokens increase in price after the opening of trading. One of the most notable ICOs in Russia this spring was held by a startup ZrCoin. The company has raised $ 7 million and is now building a plant for the production of zirconium dioxide in the dysfunctional Magnitogorsk - this is a material in demand in metallurgy. One ZrCoin token was equated to a kilogram of dioxide. By the way, in Russia there are also companies that conduct ICO "turnkey", that is, "to order" for other companies. For example, in July, the co-founder ModernToken Alexander Garkusha said that the entire ICO cycle will cost 310 thousand dollars.

There are less criminal, but equally useless examples of blockchain “implementation” even in large corporations. The already mentioned Waves Platform in 2017 created a ready-made blockchain infrastructure for Burger King in Russia. The corporation has released its own cryptocurrency "whoppercoin" (after the name of the branded burger), but does not use it in any way, says Smerkis: “It's not enough just to create a token, then you need to build an ecosystem and a community in which it will be used. Burger King, on the other hand, which is famous for its flamboyant marketing, simply made the media write news about itself for free. He does not use his cryptocurrency in any way. This is a vivid example of when companies need blockchain just for the hype. " Bloomberg experts agree: "realistically" - that is, for the functioning of blockchains within companies - only every tenth token is used out of all those issued after the 2017 ICO.

ICO- Initial Coin Offering, that is, the initial placement of coins - tokens. During the open ICO, the company issues a limited number of tokens and sells them to everyone. At the same time, the price of one token can both fall and rise if there is a great demand for it or the company is promising. If the ICO is closed, tokens are issued for the internal work of the blockchain in some company (then the blockchain is called "exclusive") and are distributed only to employees.

What Happens to Bitcoin and Cryptocurrencies

Let's go back to cryptocurrencies. What is Bitcoin?

Technically, Bitcoin is simply the first digital currency to use the blockchain. This explains its incredible popularity. Bitcoin was invented by a person or a team under the pseudonym Satoshi Nakamoto, back in 2008 describing the whole principle of operation on nine A4 sheets, and already in 2009, presenting the first working client program. Many investigative journalists are trying to find Satoshi, because, judging by the blockchain, he never spent almost a million of his bitcoins (about 900 billion rubles at the peak rate). Now over 10 million people use bitcoins all over the world. A characteristic difference between bitcoin and many cryptocurrencies is the limitation of its emission. This means that in total the miners will "mine" the final number of bitcoins - 21 million coins. This is programmed in the bitcoin code from the very beginning (see details). Source bitcoin is open - that is, anyone can write their own client program to it. These clients are often called "wallets", although only the same private keys are stored in them (different variants of wallets are described, for example,). Now the market price of bitcoin is hovering around $ 16,000.

What is happening with the bitcoin rate now?

Last week, bitcoin lost about 40% from its highest price in December, when it was worth $ 19,000. This caused panic for many investors. But other traders noticed: this year, the price of bitcoin has already dropped by more than 30% six times, and then started to rise again. Such a temporary drop in the rate of any security is called a "correction". During the correction, the currency is sold by those who bought it cheaply earlier - in order to have time to sell it at a higher price. Therefore, the exchange rate drops sharply, and everything looks like a catastrophe. In fact, the prices of all cryptocurrencies are now growing much faster than the blockchain technology itself is being introduced into the business - this is the main reason for the short-term “inflation” of the market, notes Timur Nigmatullin, financial analyst at Otkritie Broker: “Analysis of most of the global“ bubbles ”of the century shows that they collapse with a pullback of several tens or even hundreds of times, when their capitalization approaches 0.8-3.5 trillion dollars. Now the capitalization of the cryptocurrency market is about 0.65 trillion (the share of bitcoin is 50%), although at the beginning of 2017 it was less than 18 billion. " The current correction will end soon, the analyst sums up: "The market will enter the range in which new sales can start already at the beginning of 2018".

How much is bitcoin really worth? Does it have a ceiling?

The growth limit of any currency is determined by the size of the market in which this currency is popular, explains Nigmatullin: “If we assume that Bitcoin in the future will replace all money in the world and will be used as a single means of payment, the total value of all issued Bitcoin coins (its capitalization. - Ed.) will strive for the size of the entire money supply in the world. Now it is about $ 80 trillion. Bitcoin capitalization is about 270 billion. That is, in this scenario, bitcoin will rise in price by at least two orders of magnitude. Another option is to build on the popularity of bitcoin, for example, on the black market. Its global volume is now $ 1.8 trillion (not only drugs and weapons, but in general everything in the shadows). That is, so far it is still more than the capitalization of bitcoin, and it has a clear growth prospect, ”the analyst concludes. Economist Robert Schiller, who received the Nobel Prize for his assessment of the bubbles, recently said that bitcoin has signs of “inflated”, but they are connected precisely with the passion of the crowd. Schiller did not question the very revolutionary nature of the blockchain. This means that many people, investing in bitcoin, simply realize their belief in the new technology in general, they do not think about the properties of this particular cryptocurrency. In order to trade cryptocurrency, the same licenses and capitals are not required as for the classic stock market, therefore there are so many "nervous" traders among Bitcoin buyers who greatly increase the rate fluctuations up and down.

40% of bitcoins are in the hands of just one thousand people.
They are called "whales" and they all probably know each other.

What problems does Bitcoin have? For example, 40% of his coins are in the hands of just one thousand people, Bloomberg. They are called "whales" and they all probably know each other. This means that, having united, "whales" can strongly influence the price of a cryptocurrency. If you remember that the main Bitcoin mining facilities are located in China, decentralization looks strained. Another unpleasant news: mining itself, that is, the confirmation of bitcoin transactions already takes a lot of energy - the whole country of Ireland now spends less electricity - and this cryptocurrency will require more and more.

Most traders still agree that Bitcoin is a direct competitor to gold. All the gold in the world is now worth approximately $ 6.5 trillion - that's 20 times the current capitalization of bitcoin. They have the same main property - limited resource. The mass of gold on the planet is finite, as is the amount of bitcoins by 2140. Therefore, bitcoin will inevitably rise in price over time - the demand for it increases, while the release of new coins slows down. This effect is called the "deflationary spiral" in the economy.

In the future, Bitcoin will not be very convenient to pay for purchases (as it is now in gold), and it will probably play the role of just a security. American investor and founder of hedge fund Morgan Creek Capital Management Mark Yusko in an interview with Bloomberg News said that in the long term, Bitcoin will cost $ 400,000 per coin. At the same time, Timur Nigmatullin clarifies that the entire cryptocurrency market is likely to grow, but not the share of a specific bitcoin on it: “Several currencies separated from bitcoin at different times, that is, several of its“ forks ”occurred. Some of the wallet owners founded their own cryptocurrency Bitcoin Cash, and then also Bitcoin Gold. From the point of view of the code (that is, the technology itself), they are all objectively better than the original bitcoin: faster, cheaper - but their price still grows more slowly. "

What is a fork? This is scary?

No, a fork is not scary, but you need to understand the physical meaning. Remember the metaphor about miners-bartenders who all together interfere with smoothie mixers in order to get the desired taste - the hash of the block? Then we did not tell what happened to the villain who tried to give the visitor a smoothie with a different recipe. In fact, no one punishes him: a block that has not been confirmed by the blockchain remains, as it were, "on the sidelines." The cryptocurrency client program does not see it, because it is configured to consider only the longest chain of blocks as real. The “villainous” block will never be the freshest, because the villain will not be able to outrun all the other miners.

But what if the renegade miner deliberately wants to create a parallel block, with new parameters? For example, suggesting to include more transactions in it - as if by changing the size of the smoothie glass - or using another, improved encryption?

The division of the blockchain into several branches is called a "fork" (fork - literally "fork"). Fork is provoked artificially if some part of cryptocurrency users wants to radically change its properties. For this, the developers write a new client program. The history of the blockchain up to the date of the fork remains the same, but miners insert all subsequent blocks into a new, independent branch with different properties. Old client the new branch will not be seen, but the new one will work only with it. As a result, old transfers are duplicated, but a new cryptocurrency appears. As if you were given another smoothie in addition to the ordered glass of smoothies, and then the seller took off his apron, said "I am opening my cafe" - and left, beckoning you with him. Typical examples of a fork are the Bitcoin Cash branch on August 1, 2017, and the emergence of Bitcoin Gold on October 24. Crypto media are now claiming that Bitcoin has four more forks planned by the end of December.

What are the dangers of a fork? On the one hand, it does not affect your number of coins in the original cryptocurrency in any way. First, for the first time, they are being traded through cryptocurrency exchanges. The exchange also sets the starting price for them, and no one knows exactly by what principles this price is calculated. In addition, forked currencies with the original currency always have a common history of previous transactions - and hence the number of coins issued. But the owners of these coins may never come for them if they are simply not interested in the new currency. Cryptocurrency exchanges ignore this fact and consider the capitalization of new currencies, taking into account the "inactive" blockchain addresses too.

Fork- bifurcation of the cryptocurrency block chain into two branches with common history past translations, but with different parameters of the last block. From the moment of separation, blockchains become independent from each other - a new cryptocurrency appears. To use the breakaway cryptocurrency, you need to install an alternative client program.

Why do we need other cryptocurrencies?

There are a lot of cryptocurrencies - 1,300 names (according to the Coinmarketcap listing). There is technology behind everything, and it is innovation that drives the demand for them - as if carved wooden planks were used as money in your country, and scientists would suddenly come up with a banknote made of ultra-thin plastic, which is also impossible to counterfeit. All cryptocurrencies different way emissions, different transaction confirmation speed, commission, different mining principle (PoW, PoS and others), but all use the blockchain principle - that is, decentralization and multiple copying of history. Currencies born after the fork are also traded on cryptocurrency exchanges along with everyone else. The TechCrunch portal recently published a list of "Top 100 Cryptocurrencies with a description of four words for each" (Russian version is available). We will tell you a little more about several of the main players.

The cryptocurrency of the Ethereum Platform project, Russian-Canadian programmer Vitalik Buterin, appeared in 2015. The second in terms of capitalization after bitcoin, and it is also faster, and the commission is also lower. Smarter - because ether is used like. That is why in one day via ether rather than bitcoin: the majority of ICOs are now being carried out on the Ethereum platform, the most tokens are issued. However, the emission of ether is not limited and new coins are being issued constantly, so the value of one ether does not grow as fast as bitcoin. Its price is influenced by the partnerships that the Ethereum Foundation concludes with large companies, in 2017 there were even Russian Sberbank, VTB and VEB among them.

Litecoin - when Bitcoin ceased to be a “niche toy” in 2013, investors began to look for alternatives to it in a very young cryptocurrency market. Litecoin was invented by the former Google programmer Charles Lee, and for several years it became the "second cryptocurrency", although now it has dropped to sixth place in terms of capitalization. By its properties, Litecoin is faster than Bitcoin - hence its name. Lee recently sold all of his coins, ostensibly to stop influencing the price of the cryptocurrency.

Bitcoin Cash and Bitcoin Gold are the already mentioned bitcoin forks that happened in 2017. Bitcoin Cash is faster because it has increased the block size from 1 to 8 megabytes, and more reliable because it uses slightly different encryption. Bitcoin Gold allows mining only with the help of "home equipment" and technically does not allow mining on an industrial scale: thus, the creators of the new cryptocurrency want to get rid of the influence of China and increase the degree of decentralization.

Ripple is a blockchain platform with a cryptocurrency of the same name for interbank transfers. Since 2014, the development company Ripple Labs. is purposefully working on convenience for banks: among the partners are such large official structures as the National Banks of Abu Dhabi and Australia and the UniCredit Group. Traders pay attention to the fact that Ripple is not a classic "open blockchain for everyone", but corporate development. Due to its current centralization and management priorities, cryptocurrency author Jed McCaleb himself left Ripple Labs. Curiously, during the December market fall, Ripple, on the contrary, rose.

Monero is a promising cryptocurrency, primarily for the black market. Monero is distinguished by its absolute anonymity: you cannot simply view either the amount or the address of the transfers. It is impossible to trace the recipient, although all the security principles of the blockchain are preserved.

Together with cryptocurrencies, tokens of various blockchain projects, such as TRON, IOTA, EOS, Tether, Golem, Waves and many others, are traded on exchanges. Often, after ICO tokens skyrocket in value, leaving conventional cryptocurrencies behind in the overall top 20.


Stop, what other "cryptocurrency exchanges" ?! So someone controls cryptocurrencies after all?

In fact, yes. You, as a consumer, can use the blockchain only if you buy tokens or cryptocurrency for rubles or dollars. Crypto traders call regular money "fiat". The exchange process itself is a "dirty" and primitive procedure that has nothing to do with distributed ledger technology. Cryptocurrency exchanges are a classic intermediary that often does not even have ordinary banking licenses. That is, in order to take advantage of the gifts of decentralization within a specific blockchain system, you still need to trust some unknown person on the Internet, transfer fiat money to him and just wait.

Cryptocurrency exchanges are powerful. In addition to the fact that they determine the starting price of new currencies (that is, they seem to put them on the showcase), any problems with the withdrawal of funds and the service cause sharp jumps in rates. An exchange always has its own owners, one or more blockchain addresses through which payments are made, and an administration. It is with her that new blockchain projects agree to hold an ICO - it's like renting a point on the market where you are going to sell tomatoes. The largest exchanges are the old Californian Poloniex, Hong Kong Bitfinex, South Korean Bithumb, as well as Binance and Bittrex. Basically, the exchange takes place between different cryptocurrencies or with the dollar, euro, yen and South Korean won. Ruble pairs are now available only on the Ukrainian exchange Exmo. There are frequent cases of bankruptcies, for example, when the management of the exchange cannot cope with the outflow of funds, or as a result of a banal hack, as it happened for the second time with the South Korean Youbit quite recently, on December 19 (the exchange was hacked for the first time in the summer, having stolen more than 4 thousand bitcoins).

Electronic payment systems are another type of intermediary that you can come across if you want to buy cryptocurrency. The fact is that many exchanges may not support transfers from specific regional banks or require too much commission. Then traders resort to "fiat gateways" - these are electronic payment systems (like WebMoney or "Yandex.Money") through which you transfer money, as if through a pad. Most of these payment systems like Perfect Money or Payeer are “omnivorous”. They enter into wholesale partnerships with both exchanges and, for example, with real financial pyramids. Listing of all fiat gateways can be

Blockchain is the backbone of cryptocurrencies and a term that 90% of internet users have crossed over with. You have already heard it 100% somewhere. In this material, we will tell you in simple and understandable words about a term that has already begun to change our lives.

Such attention to him is due to the revolutionary spirit that he brought. In this guide, we will reveal in understandable language the essence and concept of blockchain, its role in the world of cryptocurrencies, and talk about its application in other areas of life. If you want, this is a kind of instruction for dummies.

Description of the term

The term Blockchain itself partially describes its tasks and purpose. The "Block" part is the blocks, the "chain" is the "chain". It turns out that Blockchain is a chain of blocks. And not just a chain. It maintains a strict sequence.

What are these blocks and what is the chain? Blocks are data about transactions, deals and contracts within the system, presented in cryptographic form. Initially, blockchain was (and still is) the backbone of cryptocurrency. All blocks are lined up, that is, they are interconnected. To write a new block, it is necessary to sequentially read information about the old blocks.

All data in the blockchain is accumulated and forms a constantly updated database. It is impossible to delete anything from this database or to replace / replace the block. And it is "unlimited" - an infinite number of transactions can be recorded there. This is one of the main features of the blockchain.

Blockchain can be compared to Torrent. Torrents function in P2P mode (peer to peer - computer network where all participants are equal). When we download a file from a tracker, we do not use a central server or storage. The file is directly downloaded from the same torrent participant like you. If there are no participants in the peer-to-peer network, then you will not be able to download files either. Similarly, in the blockchain. All operations are carried out directly between the subjects. And they are carried out due to the fact that all participants are connected to one network - Blockchain.

This technology was created along with the advent of cryptocurrency. It happened in 2009. Satoshi Nakamoto is considered the public person who created the new virtual currency and Blockchain. However, this personality is mythologized in the world of cryptocurrencies. This is a pseudonym, behind which is one or more people who decided (s) not to disclose their identity. Obviously, they spent thousands of hours building the blockchain.

There are two types of chaining:

  • Public Blockchain is an open, supplementary database. This type of blockchain is used in the Bitcoin cryptocurrency. Each participant can write and read data.
  • Private or private blockchain has data writing / reading restrictions. Priority nodes can be set. Private Blockchain subspecies is an exclusive blockchain. In such a chain, a group of people is established to handle transactions.

Summing up the interim results, we list key features Blockchain:

  • Decentralization- there is no server in the chain. Each participant is a server. It keeps the entire blockchain running;
  • Transparency- information about transactions, contracts and so on is stored in the public domain. However, this data cannot be changed;
  • Theoretical unlimited- theoretically, the blockchain can be supplemented with records indefinitely. Therefore, it is often compared to a supercomputer;
  • Reliability- to write new data, the consensus of the blockchain nodes is required. This allows you to filter transactions and record only legitimate transactions. It is unrealistic to substitute the hash. This blockchain feature is described in the picture below.

How blockchain works: technical details and nuances

We have partially described the principle of operation of the Blockchain above using the example of a monetary transaction. Before looking at the individual technical details, let's dwell on the design of this entire system. This is a sequence of blocks - a chain, not a vicious circle or anything else. Each of the blocks contains an array of specific data. And all the blocks are interconnected. That is, a new "array" can only be created after the old array is closed.

We have come to the main technical point - the formation and closing of blocks. As you can see from the picture above, each link in the chain contains a specific key. Until it is decrypted, the block (link) will not close. How does this decryption take place? In cryptocurrency, mining is responsible for this. Cryptocurrency miners do it using the power of video cards and processors. Those, in turn, perform computational operations, the main purpose of which is to search for a cryptographic signature to a block in the form of a hash. As soon as it is picked up, the block is closed. And the miner receives a reward in the form of a cryptocurrency for this.

The authors of the book "How the technology behind Bitcoin is changing money, business and the world" tried to describe the principle of blockchain operation in words that are understandable to an ordinary person:

“Bitcoin or other cryptocurrency is not stored in any file. Information about transactions is located in a global, publicly available database - Blockchain. It confirms and accepts the operation of this large P2P network. The whole chain is distributed: it is supported by computers all over the world. There is no central server that can be broken or hacked. The blockchain is public and very reliable at the same time, as it uses encrypted data. "

The functioning of the blockchain and its security is ensured by miners and other blockchain participants. They are also called nodes or nodes. There are full nodes. They mean miners and ordinary users of full-fledged wallets. This means that they have on their computer or other device full version blockchain. Its volume is constantly growing. If in 2015 it occupied 35 gigabytes of memory, then in 2017 it was already more than 100. Because of this, the number of full-fledged nodes began to decline. An example of a full-fledged wallet is Bitcoin-Core. The number of full nodes in the Bitcoin blockchain can be viewed on the Bitnodes service.

The more active full nodes in the blockchain, the faster information about transactions is processed. The blockchain seemingly manages to combine the incongruous. It is very reliable and decentralized at the same time. All participants supporting the work of the chain are equal to each other. There is no server or any processing center here. It turns out that the entire blockchain is not built on trusting relationships. For there is no guarantor, at first glance. However, in essence, every blockchain user acts as a guarantor. Decentralization of the network allows for the transfer of data between entities representing different countries, jurisdictions are simply by agreement among themselves. Directly. Without any intermediaries or regulators. The blockchain is built in such a way that operations cannot be blocked. So decentralization allows each user to feel independent.

Blockchain technology and its features

We mentioned earlier that information on the Blockchain is open to anyone. This means that you can see the history of the transaction and the path it took. Information about the size of the transaction is also public. In this case, the identity of the addressee and the addressee is not disclosed. This is the transparency of the blockchain.

Access to the Blockchain takes place using special keys that guarantee the reliability of the entire network. Every user has it. A key is a collection of cryptographic records. It is absolutely unique, which guarantees the impossibility of data spoofing and hacker attacks. To do this, attackers need to gain access to all computers on the network.

The mechanisms that ensure the viability and reliability of the blockchain are Proof of Work or PoW algorithms, work done, and Proof of Stake or PoS, proof of stake. Thanks to them, consensus is achieved in the blockchain.

The Proof of Work algorithm is used in the Bitcoin blockchain. The mechanism of its work is similar to the reporting in the office. Employees regularly prepare reports for verification to confirm that they have completed a specific task. Without this, they will not receive a salary, since they did not confirm the fact of the work done.

PoW on the blockchain verifies the computations generated during the creation of a new block. The following model is used here: a block is recognized as correct and closed, provided that its hash value is less than the signature sought by the miners. That is, a certain cryptographic cipher indicates the authenticity of the block. And the nodes act as "auditors" who check the authenticity of the block.

Now a block is created in the Bitcoin network within 10 minutes. At this moment, the signature search is performed. And already the check happens instantly. The algorithm is often criticized due to the fact that it requires a lot of processing power. And it is for this reason that a commission is charged when transferring bitcoins between wallets. This is how the payment for the used computing power occurs.

Against this background, a new algorithm was created - Proof of Stake. One of the associates of PoS is the founder of the Ethereum cryptocurrency Vitalik Buterin. According to him, this algorithm is not as resource intensive, and in general, it is cheaper than PoW. The Ethereum cryptocurrency blockchain is making the transition from PoW to PoS.

While computing power comes to the fore in Proof of Work, wallet balance plays a role in Proof of Stake. The implementation and confirmation of transactions will take place without the active participation of computing technology, but thanks to active coins on wallets. Ideally, all owners of the cryptocurrency on the blockchain with PoS will act as investors. The role of mining will recede into the background. However, the algorithm has significant drawbacks - it is possible to carry out duplicate transactions.

A combination of PoS and PoW may be the best algorithm option for blockchain. So far, this mechanism has not been finalized, although it is used in some altcoins: KATZcoin, Blackcoin, Espers.

At this stage of its development, blockchain has both advantages and disadvantages. We have systematized them in a table.

Benefits disadvantages
Decentralization - network participants are equal and can exchange data directly Scalability - if the Bitcoin blockchain accounted for the share of Visa transactions, then its size would reach hundreds of terabytes
Reliability - data substitution and hacker attacks are excluded, since special encrypted keys are used Fraud - the transfer of blockchain data is irreversible. Because of this, the operation cannot be rolled back, even if it was carried out by mistake.
Transparency - all blocks are available for public viewing. You can check the traversed path for any transaction 51% attack - if 51% of the computing power in the Bitcoin blockchain belongs to one device, the integrity will be violated
Versatility - blockchain can be applied not only in the financial sector, but also in other areas of life (law, real estate)

Where blockchain is used

The blockchain emerged alongside the pioneer of all cryptocurrencies, Bitcoin. About him functionality and "responsibilities" we talked about above. The blockchain guarantees transactions and stores all data about them.

Vitalik Buterin and his associates tried to make a qualitative step forward. Blockchain cryptocurrencies are often referred to as second generation. It has its own architectural features.

If the Bitcoin blockchain was originally modeled for financial transactions, then the Ethereum developers managed to implement a peer-to-peer computing network in which programmed algorithms can be executed. They are named or smart contracts. The essence of such contracts is that their execution occurs when certain conditions are met.

Smart contract on the example of a real estate purchase transaction:

Obviously, blockchain technology is relevant not only for cryptocurrency transactions, but for the entire fintech industry as a whole. Anything related to transactions can be supported by the blockchain.

The prospects of Blockchain in the financial sector have been recognized by the largest banks in the world. Back in 2013, the R3 consortium was created. It includes such banks as J.P. Morgan, Goldman Sachs, Santander, ITG and others. The group is testing a decentralized ledger in the banking sector. Individual banks are also investing in blockchain startups that have sprung up regularly over the past few years.

Banks' interest in technology stems from the potential threat cryptocurrencies pose to them. Blockchain will help reduce transaction costs and make them safer. However, the implementation of a fully decentralized protocol in the banking sector will undermine it from the inside.

The practicality of blockchain is undeniable when it comes to data storage and authentication. This decentralized data system has the potential to destroy. The blockchain can record the dates of birth of people, financial transactions, fingerprints. Store information about documents such as diplomas, passports, driver's licenses. In the long term, this can help in the fight against all kinds of fraud.

Examples of blockchain application in various spheres of life, in addition to finance:

  • Personal identification. Services in the field of identification and confirmation of access rights work on the basis of blockchain technology. They create a digital equivalent of an identity card. These startups include HYRP, BlockVerify, OneName, and others.
  • Copyright. The Ascribe platform uses an augmented registry in which artists, musicians, inventors can store copyrights using encrypted identifiers.
  • Voting. For now open register used only in private polls. However, the University of Virginia wants to implement blockchain-based technology. This will reduce the chances of tampering to zero.
  • Management and jurisprudence. Blocckhain's potential in this area is endless. Ideally, a system with reporting by representatives of local and state authorities, storage of budget data can be created. There are already projects like Borderless that combine legal and economic services.
  • Music. The Bittunes project allows songwriters to retain rights and sell their own work. There are other services aimed at distributing independent music and promoting artists.
  • Charity. Blockchain, with its ability to record and store data, is very effective in the field of philanthropy. So the GiveTrack platform provides open information about donations to funds and their costs. It is an effective tool in the fight against charity terrorists.
  • The property. The introduction of blockchain into the real estate industry can significantly improve it. The process of buying and selling will speed up, a tool will appear for the reliable storage of data on property rights, and so on. Blockchain technology is used in the service sector, exchange and ordinary trading. Potentially, it can be useful wherever reporting, authentication of something, data storage is needed. The potential is limitless.

Conclusion

Is it realistic to know all the subtleties and capabilities of the blockchain? Not. 99.9% of the world's population does not need this. It is more important to understand the very principle of technology and how it works. And with this will come an assessment of the potential of the blockchain. It may even change your life.

In the minds of the average user, the very word “blockchain” (“blockchain”) has become quite closely associated with the term “bitcoin”, which has a double effect on perception.

On the one hand, the popularity of bitcoin arouses interest in the blockchain, on the other hand, in the mass consciousness, bitcoin is often associated only with something negative, prohibited and prosecuted by lawmakers. Like, why pay with bitcoins when there is a whole zoo of electronic wallets and bank cards? Obviously, to do some dark business.

The blockchain is essentially just a tool with which you can store transaction data (database). And a tool cannot in itself be known to be good or bad: with the help of an ax, you can go and chop wood to keep warm in winter and prepare food, or you can take the same ax and reduce the population of lenders in a particular city. The tool is the same, the application and the consequences are different.

There are many areas of application, the main thing is that there should be an analogue of a transaction or similar interaction, partnership between the parties. Therefore, bitcoin and litecoin are now working on blockchain technologies, banks are very actively looking at the blockchain (in the fall of 2016, Bank of America and Microsoft announced the beginning of the development of a financial blockchain platform).

The very first real deal with real money also took place in the fall of the same year - an Israeli startup (Wave), a British bank (Barclays) and an Irish milk producer (Ornua) held a letter of credit for $ 100,000. And if earlier the process would have taken a week or more due to bureaucracy and verification of all documents, then thanks to cryptography and automated verification, everything about everything took about four hours.

On December 21, 2016, a letter of credit transaction through the blockchain was carried out by Alfa-Bank and S7.

The Central Bank of the Russian Federation, together with the country's major banks, created the Masterchain platform, with the goal of increasing the transparency and efficiency of existing financial systems.

And the EU Parliament, in principle, thought about implementation to public authorities using the blockchain.

Given the scale of application and the level of players who have already begun to use the technology in business, it is no longer possible to consider the blockchain as some strange suspicious innovation that everyone will forget about after a while.

How safe is it all?

The main advantages of using blockchain are the transparency of the transactions and multiple copying of all these transactions in such a way that each participant in the process always has information about every step of all partners.

To put it simply, imagine a large FTP share. You can see all of its contents (no hidden files), you can quickly see who uploaded files to which subfolders. Which files, when and for whom.

But at the same time, everyone has different access to these files. Someone can only enjoy the views and view the list of files in each folder. And someone (the addressee of a specific file) can download data for himself. Moreover, no one else will be able to access the file - only the one to whom it was intended.

Or, for example, a large electronic wallet with open statistics. You see that the account received 50,000 rubles from user A for user B. User B transferred them somewhere else in the system an hour later. At the same time, the users themselves, hiding behind A and B, can be either anonymous or completely self-identified - depending on the platform itself and the purpose of its creation. All participants in the chain can observe the movement of funds, but only a user with the necessary rights will have access to the funds themselves (B). The rest, in this case, play the role of observers.

This ensures the proper level of openness of the transaction - the entire chain of transactions is duplicated and stored in an unchanged encrypted form by each participant, it will not be possible to somehow falsify it.

The blockchain is decentralized, there is no one common "command center", hacking which will be able to destroy all data about the transaction and its participants or replace them.

For example, if a transaction was carried out in which 100 people participated, then this blockchain chain will remain operational and available for viewing even if 99 computers of other participants are damaged. Indeed, in fact, each link of the blockchain chain is a kind of full backup of the data of all transactions of all other participants to this link.

Hacking one of these computers will not in any way affect the safety of data on the rest (as well as change them).

Blockchain now and in the future

It is possible that now is the time when the technology is being tested live in very significant areas of public life, and soon we will see more and more projects and platforms using blockchain. Banks are already trying to actively implement this in their own country (including to reduce operating costs), more and more new players are appearing on the market, striving to popularize the use of technology.

New projects on the blockchain will be based on its main advantages - openness, security, security.

Therefore, the blockchain will be a good help for any services where users could worry about possible fraud or data safety:

  • micropayments
  • Bank operations
  • logistics
  • jurisprudence
  • medicine

In just a few years, the blockchain has already gone from a novelty in the technological world to a tool that large banks, corporations and states are beginning to use.

This only strengthens the confidence that the technology will reveal its potential even more in the future.

A little about us

We have been participating in the development of the blockchain since 2011 (the founding of BitFury) and will be happy to share with you the latest developments and news.

We started our first experiments using CPUs and GPUs for mining 6 years ago, in 2011, as part of various projects. A year later, it was decided to focus on one thing - BitFury. In 2014, mining was already deployed in 3 countries (Finland, Iceland, Georgia) on our own equipment. We are planning to build a data center in the United States.

Several interesting projects that we have already managed to implement by the current moment:

28nm chip

Came to replace our dedicated 55nm chip. The new chip worked with a consumption of 0.2 Joules per gigahash.

16nm chip

We started to implement it in our own data centers. This chip already consumed 0.06 Joules per giga hash, while the performance was 184 giga hashes per second (immersion cooling) and 140 - with air cooling.

Blockchain opens up great opportunities for government agencies - in the spring of 2016, we began work on a blockchain-based land cadastre project for Georgia. In addition to the fact that the use of blockchain will increase the level of security and greatly speed up the process of remote registration of documents, this should also reduce the cost of registering land rights, and quite significantly - from an average of $ 50-200 to 5-10 cents.

In 2014 and 2015, we managed to attract investments in three rounds of $ 20 million each, which at that time was about half of all world investments in the development of bitcoin.

Today, BitFury is one of the largest miners and creators of the blockchain platform. We are going to continue to maintain our leadership positions and actively promote blockchain technologies.

If you have any specific questions about the blockchain in general or any of our products in particular (BlockBox, 16nm ASIC chip, blockchain and government) - write in the comments, we will answer in the following posts.

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Comments 48

In the minds of the average user, the very word “blockchain” (“blockchain”) has become quite closely associated with the term “bitcoin”, which has a double effect on perception.

On the one hand, the popularity of bitcoin arouses interest in the blockchain, on the other hand, in the mass consciousness, bitcoin is often associated only with something negative, prohibited and prosecuted by lawmakers. Like, why pay with bitcoins when there is a whole zoo of electronic wallets and bank cards? Obviously, to do some dark business.

The blockchain is essentially just a tool with which you can store transaction data (database). And a tool cannot in itself be known to be good or bad: with the help of an ax, you can go and chop wood to keep warm in winter and prepare food, or you can take the same ax and reduce the population of lenders in a particular city. The tool is the same, the application and the consequences are different.

There are many areas of application, the main thing is that there should be an analogue of a transaction or similar interaction, partnership between the parties. Therefore, bitcoin and litecoin are now working on blockchain technologies, banks are very actively looking at the blockchain (in the fall of 2016, Bank of America and Microsoft announced the beginning of the development of a financial blockchain platform).

The very first real deal with real money also took place in the fall of the same year - an Israeli startup (Wave), a British bank (Barclays) and an Irish milk producer (Ornua) held a letter of credit for $ 100,000. And if earlier the process would have taken a week or more due to bureaucracy and verification of all documents, then thanks to cryptography and automated verification, everything about everything took about four hours.

On December 21, 2016, a letter of credit transaction through the blockchain was carried out by Alfa-Bank and S7.

The Central Bank of the Russian Federation, together with the country's major banks, created the Masterchain platform, with the goal of increasing the transparency and efficiency of existing financial systems.

And the EU Parliament, in principle, thought about implementation to public authorities using the blockchain.

Given the scale of application and the level of players who have already begun to use the technology in business, it is no longer possible to consider the blockchain as some strange suspicious innovation that everyone will forget about after a while.

How safe is it all?

The main advantages of using blockchain are the transparency of the transactions and multiple copying of all these transactions in such a way that each participant in the process always has information about every step of all partners.

To put it simply, imagine a large shared folder on FTP. You can see all of its contents (no hidden files), you can quickly see who uploaded files to which subfolders. Which files, when and for whom.

But at the same time, everyone has different access to these files. Someone can only enjoy the views and view the list of files in each folder. And someone (the addressee of a specific file) can download data for himself. Moreover, no one else will be able to access the file - only the one to whom it was intended.

Or, for example, a large electronic wallet with open statistics. You see that the account received 50,000 rubles from user A for user B. User B transferred them somewhere else in the system an hour later. At the same time, the users themselves, hiding behind A and B, can be either anonymous or completely self-identified - depending on the platform itself and the purpose of its creation. All participants in the chain can observe the movement of funds, but only a user with the necessary rights will have access to the funds themselves (B). The rest, in this case, play the role of observers.

This ensures the proper level of openness of the transaction - the entire chain of transactions is duplicated and stored in an unchanged encrypted form by each participant, it will not be possible to somehow falsify it.

The blockchain is decentralized, there is no one common "command center", hacking which will be able to destroy all data about the transaction and its participants or replace them.

For example, if a transaction was carried out in which 100 people participated, then this blockchain chain will remain operational and available for viewing even if 99 computers of other participants are damaged. Indeed, in fact, each link of the blockchain chain is a kind of full backup of the data of all transactions of all other participants to this link.

Hacking one of these computers will not in any way affect the safety of data on the rest (as well as change them).

Blockchain now and in the future

It is possible that now is the time when the technology is being tested live in very significant areas of public life, and soon we will see more and more projects and platforms using blockchain. Banks are already trying to actively implement this in their own country (including to reduce operating costs), more and more new players are appearing on the market, striving to popularize the use of technology.

New projects on the blockchain will be based on its main advantages - openness, security, security.

Therefore, the blockchain will be a good help for any services where users could worry about possible fraud or data safety:

  • micropayments
  • Bank operations
  • logistics
  • jurisprudence
  • medicine

In just a few years, the blockchain has already gone from a novelty in the technological world to a tool that large banks, corporations and states are beginning to use.

This only strengthens the confidence that the technology will reveal its potential even more in the future.

A little about us

We have been participating in the development of the blockchain since 2011 (the founding of BitFury) and will be happy to share with you the latest developments and news.

We started our first experiments using CPUs and GPUs for mining 6 years ago, in 2011, as part of various projects. A year later, it was decided to focus on one thing - BitFury. In 2014, mining was already deployed in 3 countries (Finland, Iceland, Georgia) on our own equipment. We are planning to build a data center in the United States.

Several interesting projects that we have already managed to implement by the current moment:

28nm chip

Came to replace our dedicated 55nm chip. The new chip worked with a consumption of 0.2 Joules per gigahash.

16nm chip

We started to implement it in our own data centers. This chip already consumed 0.06 Joules per giga hash, while the performance was 184 giga hashes per second (immersion cooling) and 140 - with air cooling.

Blockchain opens up great opportunities for government agencies - in the spring of 2016, we began work on a blockchain-based land cadastre project for Georgia. In addition to the fact that the use of blockchain will increase the level of security and greatly speed up the process of remote registration of documents, this should also reduce the cost of registering land rights, and quite significantly - from an average of $ 50-200 to 5-10 cents.

In 2014 and 2015, we managed to attract investments in three rounds of $ 20 million each, which at that time was about half of all world investments in the development of bitcoin.

Today, BitFury is one of the largest miners and creators of the blockchain platform. We are going to continue to maintain our leadership positions and actively promote blockchain technologies.

If you have any specific questions about the blockchain in general or any of our products in particular (BlockBox, 16nm ASIC chip, blockchain and government) - write in the comments, we will answer in the following posts.

Tags:

  • blockchain
  • bitcoin
  • cryptography
  • blockchain
  • bitcoin
  • bitfury
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Comments 48