What is blockchain technology, and how does it work

What is blockchain?

What are the main elements of the blockchain?

  • Distributed ledger technology
  • Immutable Records
  • Smart contracts

How does blockchain work?

  • Each transaction is stored as a block of data.
  • Each block is connected to the previous and next blocks.
  • Transactions form an immutable chain of blocks: Blockchain

How does the Bitcoin blockchain work?

  • the new hash must be based on the hash of the previous block;
  • the new hash should be the sum of the hashes of all bitcoin transactions in the last 10 minutes;
  • the new hash should contain a random, non-repeating number generated by the miners.

How Proof of Work Makes Blockchain Technology Trustworthy

How Is Blockchain Used?

  • establish trust between the parties, which, accordingly, allows you to interact and exchange reliable data with each other;
  • eliminate fragmentation of data by integrating it into a single system through a distributed registry shared across the network;
  • restrict access to this registry to parties with appropriate permissions;
  • ensure a high level of data security;
  • eliminate the need for the services of intermediaries;
  • guarantee the authenticity and integrity of the products sold to participants;
  • track and control the movement of goods and services in the supply chain.

Let’s check the main areas of blockchain application.

1. Decentralized Finance, or DeFi in short

  • lower fees compared to traditional market participants;
  • high level of transparency;
  • broader availability and faster service delivery.

2. Non-fungible token, or NTF

3. Smart contracts

  • Accuracy, efficiency, and speed.
    The contract comes into force when the participants fulfill each of the necessary contractual conditions.
  • No paperwork.
  • Transparency and reliability.
    The agreement is in the registry in encrypted form, which excludes the possibility of changing and distorting information by the participants in their favor.
  • Saving.
    To conclude a transaction, you no longer need to resort to the services of intermediaries, such as notaries or registrars, which, in turn, saves money and time.

What are the benefits of blockchain?

  • Building trust
  • High security
  • Improving Efficiency

Summary

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