What is blockchain? Part 1
In this and the following articles “What is blockchain” will be presented the view of the Izetex project team on this technology.
We want our articles to give a holistic view of the detachment. A full understanding of technology is difficult for an unprepared person to perceive, but it is important to understand the basic definitions for assessing the potential and working with technology. And for a complete picture of the world — to know the ideological, philosophical, cultural features of the blockchain, which we will discuss in the following articles.
What are the main definitions in technology?
• Peer-to-peer network (P2P) — a computer network with equal rights of participants. Each computer (a reference node) is a client and serves as a server for crypto-transactions. The electronic payment in the peer-to-peer network passes between the sender and the receiver without intermediaries and with irreversible result due to the absence of a mechanism for confirming the transaction and forcible withdrawal (exclusion, use of a third party to guarantee the reliability of the transaction through a multi-signature).
• Cryptocurrency — digital accounting units with decentralized accounting (note: the Cryptocurrency is decentralized from the main node to other computers on the network).
• Bitcoin — a payment system in a peer-to-peer network with the same unit of account and data transfer protocol. Information about cryptocurrency transactions isn’t encrypted and is available to all network members. open form. For the invariance of transactions and payment terms, cryptography is used (note digital signature for a public key system and sequential hashing).
• Hashing — converting input data of arbitrary length into an (output) bit string of fixed length to make a transaction.
Fundamental principles of blockchain
1. Transfers of electronic money through a peer-to-peer network pass between counterparties without the participation of financial organizations.
2. To prevent a “double-waste attack” (retransmission of previously used funds), a third trusted party is not required. To solve this problem, a peer-to-peer network with equal rights of participants is used without a main server.
3. The network packs transactions by adding timestamps to them, then hashes them and binds them to an uninterrupted chain. In this way, a digital record is created-a block that can not be changed without re-running the work in the form of complex calculations requiring large capacities.
4. The longest chain not only supports the peer-to-peer network and makes the record sequence unchanged, but also ensures that its computational power is required to create it.
5. As long as the majority of the processing power is controlled by network nodes that are not joined together for a joint attack, they generate the longest chain and successfully repel attacks.
6. To operate the network, a minimal structure is sufficient. Nodes can join and leave the network at their own discretion. When a node returns to the network, it can be sure that the longest chain of blocks is correct, and continue to participate in the formation of new blocks.
What kind of blockchain is the essence?
1. Technological. Database without storing information on a shared server. Ensures the performance of bitcoin.
2. Financial. A network with equal rights of participants to make transactions without intermediaries.
3. Legal. Checking the legality of transactions and identifying fraudulent activities.
To be continued…
