What is blockchain in simple terms

If you're new to the world of cryptocurrencies, the first thing you should do isFind out how the technology that liesbased on digital assets.

Blockchain is a distributed database that exists on multiple computers at the same time.This database is constantly growing as new sets of records, or "blocks," are added to it.Each block contains a timestamp and a reference to the previous block, so they actually formBlock Chain.

The database is not managed by anyone in particular, instead each user of the network hasOld blocks are saved forever, and new blocks are added to the ledger, makingIt is impossible to manipulate by forging documents, transactions and other information.to the falsification of the entire chain. 

Everyone has access to all the information on the blockchain, but only a user who owns a special private key canAs long as you're the only person who knowsIn addition, cryptography is used to ensure that copies of the blockchain are synchronized on every computer (or node) on the network. 

Blockchain does not require transaction costs, only infrastructure costs. 

By definition, blockchain is decentralized, transparent and secure. Thanks to these properties, the new technology has the potential to change the financial system.

Decentralization

Blockchain undermines the foundation of a centralized service delivery system. The technology allows transactions to be made directly between parties without intermediaries (for example, banks).

With the help of the blockchain, any contract turns intoa program that will be executed only when both parties have fulfilled the terms of the contract. This mechanism is called "smart contracts", and the areas of their possible application are almost limitless.

The same program can track information fromexternal data sources (for example, stock prices, weather forecasts, news headlines, and anything else that can be analyzed by a computer) and create contracts that will be automatically executed when certain conditions are met. Smart contracts can be used for anything from financial derivatives to insurance premiums and real estate leases to legal processes and crowdfunding.

Transparency

Blockchain hides the identity of a person or company and only shows the public address. The public address gives access to information about transactions on the wallet, but not to personal information about its owner.

Any user can view all transactions that were performed from a specific address. This transparency adds a high level of accountability.

Security

Security in the blockchain is, first of all, the inability to change data after it has been initially written to the chain, that is, "retroactively". 

The hash pointer provides this property. When transferring data, the hash pointer contains not only the address of the previous block, but also the hash data inside the previous block. Therefore, minimal changes to the record of one block activate the "chain reaction" of changing the hash of all blocks. This setting makes the data recorded on the blockchain unchanged and secure.

The idea of distributed ledger technology is not new: it was originally laid out in a 1976 research paper, "New Directions in Cryptography," but for a long time its implementation was considered too complex and insecure. 

But in 2008, an unknown programmer (or group of people) under the pseudonym Satoshi Nakamoto introduced Bitcoin, a simpler, more secure, and much more efficient implementation of blockchain technology. 

Bitcoin was one of the first digital currencies to use this technology to make payments.Thanks to the blockchain, Bitcoin was also the first digital currency to solve the double-spending problem. 

Benefits of such a distributed ledgerObviously, by reducing costs and risks, data security and transparency of all transactions, companies and corporations from most industries can benefit from this technology. Many companies and organizations have already started using blockchain to reduce the cost of international transfers. Several countries, including China, have already developed their own national blockchain and are preparing to launch it.

By 2020, the blockchain sector has changed a lot.Developers began to create their own blockchains and cryptocurrencies. According to them, new blockchains have much greater potential than the Bitcoin blockchain. Opinion leaders, popular investors, traders and crypto media appeared in the community, whose words are listened to by millions. Almost all of them agree on one thing – In the future, blockchain technology will radically change not only the financial system, but also most areas of people’s lives.