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What is blockchain technology?

Blockchain concept

Blockchain, also known as block chain, block chain, ... is a database system in the form of a chain - a block that allows storing and transmitting information securely linked and extended with each other thanks to algorithms. Extremely complex coding.

In a word, Blockchain is seen as a corporate ledger where all activities related to the company's currency are closely monitored.

In the field of technology, Blockchain is a book that stores digital data.

The idea of the birth of Blockchain

What is Blockchain? In fact, this system originated from solving the communication problem of Byzantine generals (Byzantine Generals).

An army went to capture the citadel and the commanders stood in different positions. In which there are X loyal generals who want to capture the citadel and the traitor Y General who wants to withdraw troops, a traitor general informs one group to attack and informs another group to withdraw troops. So how can the generals be consistent with information and capture the city together?

For example, in the above scenario, there needs to be a third party to make an agreement for the generals to sign. The third party is responsible for ensuring that the generals' capture of the city is uniform and consistent, because the generals may not trust each other but must absolutely trust this third party.

This is the starting idea for a Blockchain system that can help generals trust each other more.

History of Blockchain

Technology In 1991, the Blockchain System was described by W. Scott Stornetta and his collaborator Stuart Haber. With the original purpose of noting time into document files for easy information management. And these data files become immutable. This means that no one can modify the date in any way.

In 2008, the world financial system collapsed. For the first time, the concept of a peer-to-peer-decentralized electronic cash system (the primitive concept of a Blockchain system). The concept was presented by an anonymous person or group named Satoshi Nakamoto, who created an open source protocol called Bitcoin (BTC).

Bitcoin is designed with the outstanding feature of double-spending by a peer-to-peer (P2P) network protocol to manage and track transactions.

On January 3, 2009, Bitcoin was first born by Satoshi Nakamoto when he published 50 Bitcoin blocks. After that, he sold 10 Bitcoin blocks to a merchant named Half Finney, the world's first Bitcoin transaction took place on January 12, 2009.

For the first time the world knows about Blockchain technology!

Blockchain working principle

In order for a block - an information block to be added to the Blockchain system, it must ensure all four of the following factors.

There must be a transaction

That is, there must be an activity of buying, selling and exchanging to take place.

"In 2010, the first commercial Bitcoin transaction took place. The price of Bitcoin is fixed on a decentralized exchange on October 5, 2009, starting at 1 USD = 1,309.03 Bitcoin, or 1 Bitcoin = 0.00076 USD. On October 22, 2010, Bitcoin was used to buy goods for the first time – a Pizza for 10,000 bitcoins, equivalent to US$25 at the time."

That transaction must be verified

All information related to the transaction such as time, location, transaction amount, participants... must be recorded in detail. For example, when viewing order status, your order is being delivered or just released, how much is the total amount, expected time to receive the goods, etc.

That transaction must be stored in the block

At any time, you can review the transaction history as well as the order information that you have made. They are always stored in the “Order Management” section.

That block must receive the hash

Hash is a function that converts one value to another: only when a hash is received can a block be added to the blockchain.

Key Features of Blockchain Platform

Can't fake, can't remove Blockchain chains

Blockchain chains are nearly indestructible. According to the researched theory, only a quantum computer (Quantum Computer) can interfere with and decipher the Blockchain chain.

Invariant

Information once entered in the Blockchain chain is almost impossible to be edited, but can only be added with the approval of all members in the system or modified by its creator and other members. That data will keep forever.

High security

Data information in Blockchain chains is kept almost completely secure, eliminating theft as well as modification of false information.

transparent

Anyone can track Blockchain data going from one address to another. In addition, the Blockchain platform can also statistics and track the entire history on that address.

Why is the data in blockchain chains nearly immutable?

Hash Mechanism

When the data of a block is changed, the Hash of that block will also be changed. The Blockchain will detect an abnormal change in the blocks from there, leading to an alarm situation. Because now the Hash of the previous block does not match the modified block.

They can count hundreds of thousands of Hashes per second. This affects security.

At this point, thanks to the consensus algorithm, a valid intersection will be found. Solving these algorithms requires the intruder to have sufficient technical knowledge and understanding. Therefore, this mechanism ensures complete security.

Each individual in the network acts as a node. They will store and transmit information from the Blockchain system to confirm everything in order. All create a uniform machine.

When receiving the information, the nodes will start analyzing. If this consensus is greater than 50%, the block is valid and added to the blockchain.

Peer-to-peer (P2P) network combined with consensus mechanism to form a protective shield to avoid harmful activities to the system.

Blockchain technology system is divided into how many types?

Public Blockchain

The name itself says it all. This Blockchain system allows anyone to write and read data on the Blockchain. Transactions on this Blockchain require validation by thousands or even tens of thousands of nodes participating in the processing. Therefore, attacking this Blockchain system is extremely difficult and costs an extremely large amount and is almost impossible.

Private Blockchain

For this system, only the user has read permission, no write permission because this belongs to an absolutely trusted third party. Since this is a Private Blockchain, the transaction confirmation time is extremely fast because only a few devices are needed to validate the transaction.

For example, Ripple is a form of Private Blockchain, this system allows 20% of nodes to be fraudulent and only the remaining 80% is stable.

Permissioned Blockchain (consortium)

This is a form of Private but adds some other special features. Permissioned Blockchain can be called a combination of Public and Private.

For example, banks or joint venture financial institutions will use their own Blockchain.

How many major versions does the Blockchain system have?

Blockchain Technology 1.0 – Currency and Payment

The main use of this version is to deal with work related to cryptocurrencies: including currency conversion, remittances and the creation of electronic payment systems. This is also the area most familiar to us that sometimes quite a lot of people mistakenly believe that Bitcoin and Blockchain are the same.

Blockchain Technology 2.0 – Finance and Markets

This version is designed for banking and financial processing application: scaling of Blockchain, adoption of financial and market platforms. Assets include shares, checks, debt, title and any information related to an agreement or contract.

Blockchain technology 3.0 – Design and monitor operations

This version helps Blockchain move beyond finance, and into areas like education, government, healthcare, and the arts.

The above article has provided detailed information about the basics of Blockchain so that you have an overview and easier to visualize about this technology platform. Hope this article is useful to you.

Frequently asked questions about Blockchain

Using Blockchain, can users experience any disadvantages?

Blockchain is an almost perfect platform but Blockchain also has certain disadvantages for users

Energy consuming: This Blockchain launch process requires a lot of power consumption.

Takes up storage space: To operate a node in the Bitcoin Blockchain, you must download 60GB of data.

Disruption also has its downside: if you put something on the Blockchain, you have to be absolutely sure you won't regret it. Because once on the Blockchain, it will last forever, not reverse or re-execution.

Why should enterprises apply Blockchain in the management system?

Blockchain is considered as a digital data book that helps to store and transmit information in the safest and most secure way. Where all internal activities of the company are closely monitored.

Is the Blackchain system vulnerable to hackers?

As mentioned in the post above. Blockchain is an extremely solid system integrated by a consensus algorithm with a peer-to-peer network, thereby creating thousands of security barriers.

It seems impossible to penetrate and harm the Blockchain system.

Blockchain technology is applied to what industries?

Some industries applying Blockchain technology platform are as follows:

+Automotive Technology (Automotive)

+Manufacturing (Manufacturing)

+Technology, media and telecommunications (Tech, media & Telecommunications)

+Financial Services (Financial Services)

+Art & Recreation (Art & Recreation)

+Health Care (Healthcare)

+Insurance (Insurance) Retail (Retail)

+Public Sector Real Estate (Property)

+Agriculture (Agricultural) Mining (Mining)