All copies are updated when new data or transactions are recorded in blockchain through the consent of everyone involved. Diggers responsible approve the transaction and network monitoring by addressing the sophisticated formula with the help of computers. It is a P2P system, eliminating all intermediaries, enhances security, transparency and stability as well as reduce the costs and human error caused.
By enabling distribution of digital information but may not be reproduced, technology backbone blockchain has created a new type of Internet.
In the book Blockchain Revolution (2016), Don & Alex Tapscott has stated that: “Blockchain a ledger digital can not be damaged by the economic transactions, which can be programmed to record not only the financial transactions that can record everything valuable. ”
Blockchain work like?
Technology blockchain is probably the best invention since the Internet itself. It allows the exchange value without trust or evidence do believe. Imagine you and I bet 50 $ for weather tomorrow in San Francisco. I bet it will shine, you bet rain. Today we have three options to manage this transaction:
We can trust each other. Rain or shine, the loser will pay 50 dollars for the winner. If we are friends, this might be a good way to bet. However, whether they are friends or strangers, can not be easily paid for the other.
We can turn into a contract bet. With a contract in place, both parties will easily pay more, however, if one of them decided not to pay, the winner will have to pay more to cover legal expenses and judgments may takes a long time. Especially with a small amount of cash, this seems not the optimal way to manage transactions.
We can turn to a neutral third party. Each of us gave $ 50 for a third person, she would bring the total amount to the winner. But, she also absconded with all the money. Therefore, we will choose one of two options first: trust or contract.
Both trust and contracts are not the optimal solution. We can not trust the strangers and contract enforcement requires time and money. Technology blockchain is exciting because it gives us a third choice, safe, fast and cheap.
Blockchain allows write a few lines of code, the program running on blockchain, which both we send 50 dollars on it. This program will hold a $ 100 security and check the weather tomorrow automatically on multiple data sources. Sunny or rainy, it will automatically transfer the entire amount to the winner. Each party can check the contract logic, and because it is running on blockchain it can not be changed or stopped. This effort may be too high for a single transaction of $ 50, but imagine when selling home or company.
The objective of this section is to explain how blockchain operate without discussing the deep technical details, but enough so that you have a general idea of the basic logic and mechanisms.
Applications known and most discussed of technology blockchain is Bitcoin. A currency that can be used to exchange products and services, like the US dollar (USD), Euro (EUR), copper (Vietnam) and other national currencies. Please use the first application of this technology to learn how blockchain its operations.