Cryptocurrency essentials

Table of contents:

• Operations
• Decentralization
• Data encryption

Blockchain technology is a system used to build cryptocurrencies, which is a distributed database (accounting book). Information about various transactions is recorded in the chain and the blockchain works without communicating with the central server. The main function of blockchain is to store blocks (elements) containing time data and a link to the previous network node. Blockchain technology is constantly evolving, improving, revealing its potential and is increasingly used in various fields.

Technology in simple terms

A blockchain network is an interconnected chain of blocks that operates according to certain rules. The account book is located on a set of PCs, after each operation it is updated. A variety of data is entered into cells in the system, starting with transaction information and ending with ownership of any work by a specific author.
The blockchain is a chain of blocks connected to each other, filled with certain information (new records and information about the past node).

Blockchain elements are filled with information about transactions in the network (user actions: transfers, purchases, registration of rights, etc.). Once the operation is created, the transaction is sent to the mempool and waits for confirmation. As soon as the block is formed, the participants check it: if valid, they add it to the general chain. Accounts are constantly updated and always up to date (Bitcoin Fortress for reference).

Operations

A characteristic of a distributed network resides in the total transparency and availability of information for each of the participants. The chain is subject to constant data checking, so that tampering or changing the already formed part of the chain is excluded. New information appearing on the blockchain is completely transparent and available for download by every user. In Bitcoin, when installing an official "heavy" wallet, a person downloads transaction information to a PC for the lifetime of the cryptocurrency. To get information about a particular operation, you need to use special services. Just enter the block number, operation or wallet address in the search field to get detailed information.

Decentralization

The governments of many countries are annoyed by the advantages of blockchain technology: independence and the inability to control the operation of the system. There is no central server for storing information, and information is located on the computers of millions of users. It will take a lot of money and a lot of power to get even a fraction of the control. Blockchain technology has a fundamentally new structure and is ahead of existing systems in terms of reliability. Today, information about people, transactions, bank accounts, and other data is stored on one or more servers. If they are corrupted or information is stolen, the system will crash. With blockchain technology, this is impossible: the chain is not afraid of hackers and external influences.

Availability of copies on each user's computer. The blockchain is located on tens of millions of computers simultaneously, so there is no need to coordinate every transaction. Whenever a new operation appears, it is verified by network participants. Nobody has the right to change the order of blocks or make changes to the content. The key to a specific block with information is held by a specific user who has access to the information.

Data encryption

Automatic information encryption ensures network confidentiality. A cryptographic rule is used that excludes the wallet number from being associated with a specific user. The information contained in the chain elements is not shared with third parties. High speed and accuracy of operations. Blockchain technology guarantees instant transactions without intermediaries. Banking institutions, payment networks and notary offices are simply not needed. The correctness of operation is checked by each network user with maximum accuracy.