What do digital currency, personal data, your Hellspin login, and branded dresses have in common? They all need to be protected from hacking, leaks and fraud. One tool can make that happen: blockchain. Let’s understand what it is, how it works, and why the technology is expanding far beyond the cryptocurrency market.
The Vault of the Future
Blockchain is a database in which information is stored as an unchanging chain of blocks. The uniqueness of the technology is that it is impossible to change or delete a block in the chain. Moreover, blockchain is based on the principle of decentralization: it is stored on all computers participating in the system.
Each block is information. The order, the transaction, the dates and the parties to the transaction – everything that goes into the blockchain stays there forever. This is how the technology ensures transparency and data protection.
Blockchain was first applied to digital currency. Transaction information in bitcoin forms blocks that can be viewed by any cryptocurrency owner.
Where and Why Use Blockchain?
Banks and stock exchanges use the technology to improve control and efficiency of money transactions.
The function of smart contracts allows the entire chain of goods movement to be tracked. For example, clothing or food manufacturers can check where the raw materials for their product were produced and eliminate the possibility of counterfeiting.
A non-interchangeable token is a certificate that secures the rights to ownership of a digital object. This is how the NFT regulates copyright in digital art: photos, music, paintings, and more.
Storage of Personal Data
It’s not uncommon to see news about leaks of user data in the media. Both private and public companies undergo hacking. Creating digital profiles will save society from such problems. For example, in Estonia, a number of public services are accessed via blockchain.
And this is not the whole list of areas in which this technology is effective. Electronic voting and elections, smart labels that can reflect the entire history of a product’s movement and creation, authentication of precious stones – blockchain can provide transparency in any industry.
Who’s Doing It
Adding a blockchain to the system is done through mining. Miners perform complex calculations (or rather, they are implemented by computers) to generate a new block. Out of millions of combinations, the miner picks one hash (a sequence of numbers and letters) to attach the block and is rewarded with cryptocurrency.
Today, successful mining requires powerful computers and video cards, as the creation of each new block requires more power.
Where to Learn the Basics of Blockchain
First, learn the basics of cryptocurrency and blockchain, including how to control risk. The industry is growing by leaps and bounds, and new tools are emerging all the time. Therefore, even experienced investors sometimes find it useful to refresh their knowledge of key concepts like decentralization, market volatility factors and trading strategies, for example, in a bear or bull market.
There are plenty of bloggers and media guides for this purpose online, and most major crypto exchanges have educational products for users. Beginners need a consistent approach to learning and systematizing topics by level of sophistication: from basic blockchain principles, to advanced – choosing a strategy for a particular market cycle.
It is convenient to go through all the topics on exchanges’ training platforms so that you can practice right away. Huobi (Huobi Learn), Binance (Binance Academy), Bybit, and Currency.com have such resources.