The blockchain is probably one of the greatest economic innovations of recent history. The titles of newspaper articles, such as ” Blockchain will revolutionize the Internet ” by Bayerischer Rundfunk, ” The huge potential of the digital data register ” by BeraterNews or ” Great expectations of blockchain technology ” by Deutschlandfunk, bear witness to this. At first glance, a blockchain but nothing more than a digital ledger or better a database. This is not necessarily new or special. Digital account books have been around since the establishment of online banking, and digital database systems have been even longer. What is the revolutionary potential of this technology? This will be discussed in more detail below.
The origins of blockchain technology
To understand the technology, it is useful to take a quick look at the evolutionary history of Bitcoin ( What is Bitcoin? ). The crypto-currency Bitcoin and the block-chain technology are closely connected. The advent of blockchain technology in scientific discourse dates back to a time when the Internet as it exists today did not exist.
A starting point can be set in 1979 when Ralph Merkle came across the Merkle Tree principle. Another event can be dated to the year 1983. This year David Chaum published the first white paper describing an electronic currency. A decade later, W. Scott Stornetta and Stuart Haber laid the groundwork for a cryptographically concatenated concatenation of individual digital hash blocks, which today make up the individual components of a blockchain. In 1997, Adam Back proposed the foundation of the Bitcoin proof-of-work algorithm to implement the concept of iPornOffer digital currency. The proof concept was originally used against denial of service attacks and email spams. The development steps described above are part of scientific discourse. This discourse paved the way for the cryptocurrency Bitcoin. This digital currency was described in 2008 by Satoshi Nakamoto in a white paper. Blockchain technology is an integral part of Bitcoin. Merkle tree, hash blocks, proof-of-work algorithm, cryptocurrency, what does all this mean?
Blockchain definition and explanation
The blockchain is a novel technology that allows you to store, process, share and manage any type of information in a publicly accessible database. In a continuous list of records (called blocks ), they are concatenated using cryptography. The beginning of any Blockchain makes the creation block or better the Genesis block.
The original idea of Blockchain is described in the Bitcoin White Paper. The person or group behind the pseudonym “Satoshi Nakamoto” describes existing, serious problems in dealing with monetary values. Central institutions, such as banks, insurance companies or governments, are accused of misuse of trust when dealing with monetary values. Banks, for example, use the money entrusted to them to operate inefficient and cost-intensive businesses themselves. A possible example of this is the bursting of the real estate bubble in the US in 2008, which had a negative impact on the global economic system worldwide and caused thousands of people to come into existential hardship. To prevent misuse of trust, and the associated misuse of data, at a systemic level, this new technology has been developed. Misappropriation of funds, misuse of trust or simply fraud is made more difficult by this new technology.
The functional principle of a blockchain
The starting point of blockchain technology is the shifting of control over monetary values or information. Control over monetary values and information is decentralized, so to speak. This means that the information a bank has is made publicly available to everyone. The blockchain, considered as an account book, is stored within a decentralized computer network. This means that many different computers are connected to each other via the Internet worldwide. Each of these computers has the entire account book stored. In this way, scammers are quickly located. Through the decentralized network, fraudsters can be identified by matching the respective Blockchain versions and excluded from the network. In the same way, a bank’s customers could recognize when their own money is used by their banker for wrong purposes. This creates security. Anonymity, decentralization, and security are the three key features of Blockchain technology.
The technical operation of a blockchain
The functionality of a blockchain can be described by the Bitcoin blockchain. Bitcoin refers to a digital unit that works as a value carrier. Bitcoins are generated by the so-called proof-of-work algorithm. This algorithm is integrated with software that can be downloaded and operated by individual computers within the Bitcoin network. The algorithm is used to settle transactions made (transfers) from one account to another account with other transactions so that the entire record can be encrypted into the blockchain. This computation process is generally called mining. The algorithm used to operate bitcoin mining is the SHA-256 algorithm. It transforms the transaction information into hexadecimal numbers and places it within the blockchain. The newly generated hash blocks from porndiscounts.org contain information of the previously inserted hash block.
Blockchain technology is revolutionizing the social, economic handling of sensitive information and monetary values. The technology makes information flows faster, safer and more reliable. It works anonymously and decentralized. However, we are currently only at the beginning of this new technology. Weaknesses such as scalability and difficult integration into existing systems will probably be remedied in the foreseeable future.