Bitcoin is the first-ever completely digital currency. In opposite to e-money, it doesn’t exist even in the form of a digital file. All we have is a huge flow of data on all the transactions that have ever been made. The blockchain is made as a giant ledger that is open to all the participants of the network. Each transaction isn’t stored separately but is placed into the blocks of the chain. There are different mechanisms to create a new block. The following two mechanisms are the most widely spread.
- PoW (proof-of-work). Miners have to solve a difficult cryptographic equation. There is a new block that is being added as a result of the equation. The system awards the finder with some amount of coins.
- PoS (proof-of-stake). The mechanism presupposes inclusion of a new block by a user that obtains a certain amount of coins. More coins the user has, the more the probability he or she will generate a new block.
Each new block stores information about the previous one. One more peculiar feature of the blockchain operation is its decentralization as the information is being simultaneously kept by all the participants to the system (miners, master nodes). Once a block is added to the chain it cannot be changed or deleted.
Let’s consider the main blockchain features thanks to which the system is considered to be extremely safe.
Digital ledger of all the financial transactions makes the foundation of the blockchain tech. As a rule, such electronic books of accounts make the most vulnerable points. If crackers get access to the general ledger it may result in a complete system fall down as having access to the records a cracker can steal a limitless amount of money or obtain personal information just having looked at the list of transactions.
The blockchain is a decentralized system. It means that a single computer or system cannot gain control over the entire ledger. Then, to get access to the general ledger one has to organize incredible difficult and well-coordinated operation, so that it would be possible to attack thousands of devices at the same time.
The very chain of the transactions makes another principle to provide exceptional security. The general ledger is made as a long chain of consequent blocks. Each block within the chain is just a part of the entire structure that originates from the first transaction made in the system.
It means that anybody who decides to amend the information on the transaction will have to amend all the records leading to this transaction.
Based on the above information, we can distinguish the following features characterizing the blockchain transactions:
- The absence of administration.
Here we reach the heart of the issue. What is the range of spheres where the blockchain technology can prove its high potential? As we have stated many times, blockchain can go far beyond the financial sector and bring benefit to many more spheres. Here you have a list of the spheres within the limitless scope of the blockchain application.
- Financial institutions
- Car rental, sale, and sharing
- Internet of things
- Stock of shares
- Supply chains
And we are sure that with each passing day more specialists from various spheres will turn their attention to the advantages the blockchain transactions can award them with.