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Blockchain basic theses (suitable for the humanities)
With all the variety of participants and services, the Internet for business purposes remains quite vulnerable, largely centralized and needs intermediaries to whom participants in Internet transactions entrust their data, finances and other aspects of business.
Blockchain as a response to modern challenges
The Internet has provided free network access to information located on the sites and servers of other users, available in a fully automatic mode without human intervention and regardless of his location.
Services of companies such as Google and Facebook have demonstrated an efficient resource allocation model, in which the cost of executing user requests at the expense of a multi-million user audience has dropped to virtually zero. As a result, the latest services based on the principle of the sharing economy (sharedeconomy) make our life more economical and convenient.
Many visionaries and experts in the early stages of the Internet also assumed that the internal and external transaction costs of companies (for example, the costs of finding, coordinating and communicating) would soon be significantly reduced. However, the Internet did not have a strong impact on the modern corporate and business architecture, and it was not possible to significantly reduce most of the transaction costs.
Since it is rather difficult in business to guarantee or somehow reproduce trust, until now society needed a huge number of intermediaries who would serve as guarantors of trust. In cyberspace, trust is based on two requirements: to prove that you are who you indicate (authentication), and to prove that you have the necessary permission to perform an action (authorization). It is these requirements that are best implemented using the blockchain concept.
This concept is constantly expanding and supplemented, since it is in the first turbulent phase of its development. Blockchain is a distributed database that contains an ever-growing list of data records (transactions). This public data register is distinguished by a high level of protection against falsification and revision, as well as a complete lack of reference to a specific geographic location.
At present, it is customary to consider financial transactions as a transaction, however, in the general case, such transactions can be registration of documents, property rights, or, in general, a change in the status of any entity. Broadly speaking, transactions and data are synonymous.
Blockchain epitomizes a secure and decentralized framework for processing transactions. The main property of the blockchain system — the ability to record facts and data with built-in protection against malicious interference — creates undeniable advantages over other distributed data processing and storage systems, due to which it promises to save us from intermediaries in many spheres of life, makes us reconsider the traditional ways of carrying out transactions, storing information, transfer of assets and registration of rights.
The essence of blockchain technology
The blockchain infrastructure, which implies the permanent storage of a record of all transactions and data made, leads to the fact that this data cannot be erased or imperceptibly altered. At its core, it is an endless digital chronicle of all human reality, and the built-in system of authentication and validation of transactions allows it to do without a centralized node for control and supervision.
The main building unit in the blockchain system is the block. As validated transaction records are formed in blocks, they are attached to an already existing “blockchain”. Subsequent formed blocks, which also successfully passed through the consensus mechanism, join the previous ones and become a continuation of an infinitely lengthening chain.
In the case of the most popular blockchain network, Bitcoin, transactions are verified by the so-called miners (miners) — system participants who confirm the authenticity of the actions performed for a fixed fee, and then form blocks from the transaction records.
Extraction of unique hashes in the mining process is associated with solving complex mathematical problems, so miners must have huge computing power in their arsenal. These participants are the ultimate interested builders of the entire blockchain.
Each block consists of a certain number of unique transactions. For example, in the case of Bitcoin, such transactions are money transfers between users of the system.
The main advantage of blockchain over traditional financial or other transactions is the absence of intermediaries. Nowadays, any transaction with money, documents or other data inevitably needs intermediaries and controlling players, regulators. The authenticity of financial transactions is confirmed by banks and other non-banking institutions, government authorities or notaries confirm the authenticity of many other transactions.
The blockchain is completely decentralized and autonomous, so transactions are verified by the system participants themselves, which simplifies many procedures and eliminates intermediaries. The participants in the blockchain system create a kind of notarial ecosystem, where everyone confirms the truth of the information in the registry.
All blockchain users form a network of computers, each of which stores a copy of the blockchain data. This is usually a complete copy of all blocks. This, in turn, means that in order to shutdown or damage the blockchain, it is necessary to hack the computers of all participants, which is a much less trivial task compared to hacking a corporate network of any degree of security. At the same time, the existence of at least one computer with data on blocks is a sufficient condition for the existence of the system.
Continued in the next part..
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