Blockchain is a real revolution in the world of financial trading, not only financial trading, but it goes beyond that to be a comprehensive technology that can be relied upon to create an integrated technological system like the Internet system we are used to. In this article, we will talk about blockchain technology in a simplified and easy way from many aspects. We will show you ways to benefit from this technology and make profits through it, and we will also provide you with great sources to learn it.
What is blockchain technology?
Blockchain technology is a completely new software technology that first appeared in 2009 in a research paper presented by Satoshi Nakamoto and whose primary purpose was to create the digital currency Bitcoin. This technology is based on a peer-to-peer system; that is, transactions are conducted between users of this technology without any intermediary. It is a decentralized technology, meaning that no one controls the processes that take place through it. There are no government agencies, for example, that control the course of things with it; not even companies manage and organize work with it.
Blockchain is an encryption technology, meaning that the data that is transmitted, or the money that is circulated through it, is of unknown origin, for example if Jack sends 3 bitcoins to his brother Muhammad, no one will be able to know Jack or Mohammad, because the people in the blockchain system are just Codes.
Bitcoin is the first currency and the first system built on Blockchain technology, but fortunately, Blockchain technology is an open-source system, and this has led to its copying and application in many other digital currencies. In fact, many people understand that this technology is limited to digital currencies only, but this technology goes beyond the idea of digital currencies.
Because the blockchain system can be used for a variety of purposes, it is reasonable to expect that blockchain technology, as previously stated, will be applied as an alternative or parallel system to the concept of the internet in general.Through Blockchain technology, it is possible to build applications that perform any task or perform any function, just like smart phone applications or computer programs; the only difference is that they operate on a different system, as I will explain shortly. In fact, these are not theoretical ideas, but there are applications on the ground for blockchain technology other than digital currencies. Anyone who read my article on Ethereum can easily clarify this.
Blockchain from a technical perspective
In fact, the technical concept of this technology is not easy to understand, especially for non-specialists, and that is the case with technology in general, as it is not easy to understand. It is not surprising that you see many people who do not yet know what the Internet is, for example. So here I will try to shorten and simplify things to the extent that it makes the idea easy to understand and simple in meaning. We mentioned a while ago that blockchain technology is a new technology that can be applied in many fields, but to facilitate the idea, I will discuss the explanation of blockchain technology from the perspective of digital currencies familiar to many.
Every project that is made based on blockchain technology represents an application. This application is designed and programmed using programming languages such as C++ or JavaScript. The first application of this technology was the Bitcoin project, which is the most famous and successful so far. It is worth noting here that blockchain technology is an open source technology, meaning that anyone can copy the code of any application, make modifications to it, and publish it again as a new application.
This explains why once this technology was only limited to Bitcoin, but now there are more than 1,500 different currencies on this platform.
We return to the idea again. In order to start dealing with this application, let’s say Bitcoin, for example, you have to create an account, and this account is created through something called a wallet, which you must download to your computer or smartphone.
The main idea here and the difference in this technology is that it is managed and records the transactions that take place through it by the members who actually use it.
We said above that it is a decentralized system, so anyone can play a role in maintaining the system by recording the transactions that take place through it.
There are hundreds of thousands of such people around the world, so every operation or transaction that takes place is saved on thousands of devices in different places around the world. From here stems the genius idea of the security of this system, which makes it almost impossible to penetrate it. These people arrange the operations into individual computational chains, which together make up the blockchain, which acts as a huge ledger containing everything that is done through the system.
Note: In the field of accounting, the term “ledger” refers to an accounting document in which operations are collected in a sequential and arranged manner according to the occurrence of accounting operations. It is a single accounting document in a single book that contains all operations, and every new operation that takes place has an impact on the book in general and cannot be deleted or retracted.
We return to our idea: these people or groups (who record transactions) do not do so (i.e., maintain order) voluntarily, but for a fee. The return is coins that are generated for those who solve difficult and complex mathematical equations. In fact, this requires certain types of massive computers, which have very high specifications and are extremely fast, and they also require a high level of electrical energy to operate.
In order to clarify the idea in a more practical way, let us compare the blockchain system that we are talking about today with a system that is familiar to all of us, namely the banking system.
It is well known that banks are central systems that record and save financial transactions on their own databases, and they are the ones that guarantee everyone’s right to own money with them. In return, they charge commissions for all this work that they do. Since transactions are only recorded on the bank’s databases, they can be tampered with (this often doesn’t happen in reality, but it can). On the other hand, blockchain systems such as Bitcoin are decentralized systems, as no person or institution owns them. Preserving the rights of people to own Bitcoin is determined by recording transactions on hundreds of thousands of computers around the world, and recording these transactions means acknowledging each holder of his right.
The blockchain system is a cryptographic system; you, as a user, will be just code on the system, and anyone who uses it can know: code x has converted 5 bitcoins to code y, and this is not tamper-proof because it is saved in the block chain on hundreds of thousands of machines. By owning the entry data for the code, you are the owner of it, with the testimony of hundreds of thousands of computers around the world, and this is what makes the difference between this new technology and other traditional systems.
Read also: What is machine learning and how do I work with it?
